A comprehensive analysis of credit appraisal and  NPA resolution strategies in India

SUBASH NATH; Braja Kishore  Mishra; Sunil Kumar Dhal; Deepti Ranjan Sabat

Authors

Dr. Subash Ch. Nath Professor in Marketing, Sri Sri University, Odisha
Braja Kishore Mishra Research Scholar, Sri Sri University
Dr. Sunil Kumar Dhal Professor in Management, Sri Sri University, Odisha
Dr. Deepti Ranjan Sabat Assistant Professor in Marketing, Sri Sri University, Odisha

Keywords:

credit appraisal, non-performing assets (NPAS), banking sector in India, behavioural analytics, risk management, financial fraud prevention

Abstract

This study examines the enduring structural challenges constraining the stability and efficiency of the Indian banking sector, as documented in successive reports by the Reserve Bank of India (RBI), government agencies, and leading financial institutions. Despite more than a decade of regulatory reform, the sector continues to struggle with rising non‑performing assets (NPAs), recurring financial frauds, and inefficiencies in credit‑risk governance. Using six representative institutions State Bank of India (SBI), Punjab National Bank (PNB), HDFC Bank, ICICI Bank, HSBC, and Standard Chartered the research undertakes a comparative analysis of credit‑appraisal practices, technology adoption, and recovery strategies across public, private, and foreign banks. The findings reveal critical institutional shortcomings, particularly in public sector banks, where compliance‑driven frameworks have limited innovation in credit evaluation. In contrast, private and foreign banks increasingly deploy advanced technologies such as artificial intelligence, blockchain, and predictive analytics to strengthen risk assessment and fraud detection. Building on these contrasts, the study proposes an integrated appraisal mechanism that incorporates behavioural analytics, psychometric profiling, and socio‑cultural dimensions. This model enhances fraud prevention, improves recovery efficiency, safeguards public funds, and fosters a more resilient and sustainable banking ecosystem.

References

Baliarsingh, R. K., Nath, S. C., & Swain, D. (2025). A study on the impact of perceived risk on post-purchase behavioural intention towards e-pharmacy in the twin cities of Odisha. International Journal of Research, 14(2), 86–92. ISSN 2231-6124.

Baliarsingh, R. K., Nath, S. C., Swain, D., & Dhal, S. (2025). Factors influencing consumers’ online purchase intention towards medicines: A study based on the extended UTAUT theory. Academy of Marketing Studies Journal, 29(3), 1–18. Print ISSN: 1095-6298 | Online ISSN: 1528-2678.

Banik, A. (2024). Credit risk management in Indian public and small finance banks: Challenges and opportunities. International Journal of Banking and Finance, 18(2), 45–62.

Deloitte India. (2025). Banking risk outlook: Predictive compliance and borrower monitoring in India. Deloitte Insights. Retrieved from https://www.deloitte.com

Dhal, S., Hota, P., Baliarsingh, R. K., & Sabat, D. R. Empowering performance: Evaluating diversity and inclusivity training in private banks of India. In International Management Perspective Conference (p. 61).

Dhal, S., Sabat, D. R., & Hota, P. (2024). An empirical investigation of the factors affecting social media advertisements on e-tailing in Odisha. Srusti Management Review, 17(2).

Gayatri Samantaray, Dr. Subash Ch. Nath, Dr. Dindayal Swain, Dr. Rajat Kumar Baliarsingh, Dr. Deepti Ranjan Sabat. (2025). Adoption of digital banking services on the level of security and privacy: A study on rural customers in selected districts of Odisha. Advances in Consumer Research, 2(5), 1979–1987.

Kumar, R., & Singh, P. (2022). Beyond balance sheets: Behavioral determinants of credit risk in Indian banking. Journal of Financial Services Research, 41(3), 215–233.

Mehta, S. (2021). Effectiveness of SARFAESI and IBC in credit recovery: Evidence from Indian banks. Indian Journal of Law and Economics, 12(1), 77–94.

Mishra, B. K., Dhal, S., & Nath, S. (2025). An explorative study of an ‘alternative mechanism’ in the current practice of credit analysis in Indian banks to safeguard public money. Asia-Pacific Journal of Management Research and Innovation.

Mishra, B. K., Nath, S. Ch., Dhal, S. K., & Baliarsingh, R. K. (2026). Integrating social scoring metrics in credit risk assessment: A paradigm shifts in financial inclusion. Academy of Marketing Studies Journal, 30(1), 1–13.

Mohanty, S. S., Nath, S. C., Sabat, D. R., & Baliarsingh, R. K. (n.d.). Understanding the dynamics of augmented reality adoption in Indian e-commerce: A study on consumer perception and acceptance.

Mohanty, S. S., Nath, S. C., & Sabat, D. R. (2025). Augmented reality marketing: Creating immersive brand stories. International Journal of Multidisciplinary Research & Reviews, 4(3), 142–151.

Nair, V., & Joshi, R. (2023). Hybrid credit scoring models: Integrating behavioral cues with financial ratios in India. Asian Journal of Economics and Finance, 5(4), 101–118.

Nath, S. C. (2009). E-business adoption and development: The role of strategic orientation and proactivity in small and medium-sized Internet firms. Utkal Management Review: A Bi-Annual Journal of Management, 1(1), July–December.

Nath, S. C. (2010). Cross-cultural effects on Internet buying behaviour: An empirical study. The IUP Journal of Systems Management, 8(3), August.

Nath, S. C. (2011). Profile of Internet users in Odisha: An empirical study. Sidhant: A Biannual Journal of Management, April–June, 2231-0649.

Nath, S. C. (2012). Consumers’ responsiveness to Internet marketing: An empirical study. International Journal of Research in Commerce and Management (IJRCM).

Nath, S. C. (2014). Internet usage categories and profile of each category with respect to demographic factors: An empirical study in Odisha. GITAM Journal of Management, 12(2), April–June. ISSN 0972-740X.

Nath, S. C. (2014, December 28–29). Computerized systems as a strategic marketing tool for the effectiveness of small and medium enterprises in Odisha. In Proceedings of the International Conference on Big Data & Analytics for Business, New Delhi, India (ISBN 978-1-63415-497-0).

Nath, S. C., Malla, M., Pasumarthi, S. S., & Dhal, S. K. (2020, January). A study on impact of cloud-based computing on performance of human resources in selected IT industries in Odisha. International Journal of Scientific & Technology Research, 9(1), 2716–2723. ISSN: 2277-8616.

Nath, S. C., & Patra, S. K. (2016). Effectiveness of computerized systems for small and medium enterprises in Odisha. Small Enterprises Development, Management and Extension Journal, 41(3). ISSN (P): 0970-8464; ISSN (O): 2456-1223.

Nath, S. C., & Popli, R. (2020, February). Relationship between internet addiction and the academic performance of students. Our Heritage, 68(30), 8846–8861. ISSN: 0474-9030.

Nath, S. C., & Popli, R. (2023). A study on importance of customer satisfaction in online shopping. European Chemical Bulletin, 12(Special Issue 4), 15561–15575. ISSN: 2063-5346.

Nath, S. C., & Popli, R. (2023). Emerging trends of online food ordering apps in India. National Research Journal of Business Economics, 10(1), 15–20. ISSN: 2349-2015.

Nath, S. C., Popli, R., & Sankar, R. (2023). A study on impact of online shopping on direct system in India and the road ahead. Global Business and Economic Review, 29(1). Print ISSN: 1097-4954; Online ISSN: 1745-1329.

Patnaik, P., Dhal, S., Sabat, D. R., & Patnaik, B. Understanding the risks of online electronics shopping: A comprehensive overview.

Prusty, R., Nath, S. C., & Dash, M. (2025). Understanding consumers’ impulse buying behaviour during the COVID-19 pandemic. Journal of Business Innovation and Research. https://doi.org/10.1504/IJBIR.2023.10062727

Prusty, R., Nath, S. C., & Dash, M. (2025). Unveiling influential aspects shaping consumer post-purchase satisfaction in the consumer durables sector in the context of sustainability. International Journal of Indian Culture and Business Management. https://doi.org/10.1504/IJICBM.2023.10062714

Reserve Bank of India. (2020–2024). Annual report: Trends and progress of banking in India. Mumbai: RBI.

Sabat, D. R., & Nath, S. C. (2025). Investigating the core elements impacting the integration of artificial intelligence in digital marketing. In Navigating digital disruption: Strategies for sustainable business management (Chapter 10, pp. 61–64). Taylor & Francis. https://doi.org/10.4324/9781003716617-10

Sabat, D. R., Nath, S. C., Swain, D., & Baliarsingh, R. K. (2024). Analyzing the factors and perceptions of online retailers: A study of e-retailing. Empirical Economics Letters, 23(Special Issue 2), 299–305. https://doi.org/10.5281/zenodo.12701116

Sahu, D. K., & Nath, S. C. (2024). Financial inclusion in the digital age: Leveraging block chain, mobile banking, and CSCs to reach rural communities. Indian Journal of Technical Education, 47(Special Issue 1, November 2024). ISSN: 0971-3037.

Sahu, D. K., Nath, S. C., Bisoyi, B., & Kumar, A. (2024). Evaluating the access to Common Service Centres for banking services from the perspective of rural women entrepreneurs. Environment and Social Psychology, 9(2). ISSN: 2424-8975.

Samantray, G., Nath, S. C., Swain, D., Baliarsingh, R. K., & Sabat, D. R. (2025). Adoption of digital banking services on the level of security and privacy: A study on rural customers in selected districts of Odisha. Advances in Consumer Research, 2(5), 1979–1987.

Sharma, M. (2023). Managing credit risk in Indian commercial banks: Fraud detection and NPA correlation. Journal of Risk and Financial Management, 16(7), 1–19.

World Bank & International Finance Corporation. (2021–2024). Inclusive credit models and behavioral economics in emerging markets. Washington, DC: World Bank Publications.