isk is all pervasive and is prevalent in every activity, be it a manufacturing or trading or service related. Human beings always attempt to manage the Risks faced by them in their day-to-day activities of life. Keeping inflammable material away from fire, saving for possible future needs, creation of a legal protection etc. are some of the attempts at managing the Risks.

Managing Risk is nothing but managing the Risk before the Risk manages. Every Industry strives to arrest the Risks with a view to minimize its losses and make optimum revenue. Banking Industry, primarily dealing with financial services can be no exception and thus encounters with many related Risks. It is imperative that Banks have to identify and measure various Risks faced by them and initiate suitable remedial measures to mitigate them.

In the recent past Financial Institutions have faced serious Banking issues that are caused by the relaxation of credit standards to the borrowers and counterparties, unable to manage or mitigate risk in a portfolio, unable to cope up with the dynamic economic requirements or any other situation that leads to the deterioration in the credit standing of a counter party. Thus, Credit Risk Management should be a robust mechanism which enables Banks and Financial Institutions to actively manage their portfolios in order to minimize losses and earn a return over and above expected average return.

Credit Risk Management is a structured approach to managing uncertainties through risk assessment, developing strategies to manage it and mitigation of risk using managerial resources (Nnanna, 2004). The objective of risk management is to reduce the effects of different kinds of risks.

The very nature of the Banking business is so sensitive because more than 85% of their liability is deposits from depositors (Saunders, Cornett, 2005). Banks use deposits to generate credit for their borrowers, which is in fact a revenue generating activity for most of the Banks. The aforesaid credit creation process exposes the Banks to high default risk which might lead to financial distress including Bankruptcy. Another issue is the customer's defaulting during their credit repayment which in turn causes a great deal of reduction in the Bank's revenue generating capacity, thereby leading the Banks to reduce the amount of credit grants to their prospective loan applicants. To generate earnings, to grow and to survive the tough competition, the Bank has to create the demand for credit in their existing clients as well as the new ones.

The main objective of the study is to examine the credit risk management on the performance of

Ho : There is no significant difference in the trainings received on Credit Risk across different Types of Banks.

The study enables the Banker to understand the importance of their lending and control mechanism given the fact that the Banks are expected to lend under stiff monetary conditions and economic regulations. This study further attempt to assist the credit risk managers and regulatory bodies in ensuring to create a safe and hassle-free Banking environment thereby enhancing the country's economy which is on the performance of various Banks and financial institutions operating in the economy.

The study is limited to only the Indian Banks and Foreign Banks operating in India and covers a period of ten (10) years from 2002-2013. A structured questionnaire has been designed and administered to the Operating Personnel handling Risk Management in the select sample Banks.

There have been a large number of conceptual frameworks published about Risk Management in general. However, the number of the empirical studies on Risk Management strategies and practices with particular reference to Credit Risk Management in Banks and Financial Institutions was found to be relatively very small.

As stated by Reserve Bank of India (RBI, 2005), Credit Risk is the major component of Risk Management system and this should receive special attention of the Top Management of a Bank. Credit Risk is considered as the major risk inherent in a Bank's banking activities.

Any mismanaging of this risk may lead a Bank into great trouble or even Bankruptcy, which is evident from various Bank failure scenarios. Managing Credit Risk in Banks is a herculean task as robust Risk Management strategies and practices are needed for identifying, measuring, controlling and minimizing the impact of Credit Risk.

Culp and Naves (1998) have considered default risk and resale risk to be the two types of credit risk. Harsher (2005) views that there are six types of Credit Risk, including default risk, counterparty pre-settlement risk, counterparty settlement risk, legal risk, country or sovereign risk and concentration risk.

According to Taxman, (2006) the factors that cause Credit Risk which in turn has an adverse impact of the Bank's credit standards and Bank's profitability are: Discrepancies occurring during the loan proposal appraisal, inconsistency during the assessment of financial stability of borrowers or counter-party to gauge their creditworthiness, lacking clarity in lending policies and procedures, following liberal standards during the sanction of loan, no sufficient background check being done on the borrowers or counter-party, insufficient value of the collaterals pledged to the Banks to obtain the loan facilities, high exposure limits sanctioned for individuals at par with the business community, insufficient knowledge and skills of the Operating Personnel during the process of loan proposals, insufficient knowledge on the current market scenario and economy's performance, no proper coordination between the different department in the Bank which are in-charge of the activities relating to Credit Risk, organization structure with respect to responsibility and authority have not been clearly defined, no good system to rate Credit Risk and no reliable data is available to manage Credit Risk.

Banks should strive towards having a robust credit policy manual that should be updated on a timely basis to meet the dynamic nature of business. Apart from that Banks should establish an appropriate environment, streamline a sound credit granting process, manage and maintain appropriate credit identification, credit measurement and credit monitoring process thereby ensuring adequate control over the Credit Risk.

RBI has advised Banks to adopt a risk-based internal audit system so as to ensure an effective Credit Risk Management control systems that ensure Banks to achieve high quality standards and also adhere to all the regulatory compliances. To ensure an efficient riskbased credit audit, Banks have to formulate an risk based audit policy, a proper set-up needs to be established which clearly demarcates the roles and responsibilities of the Operating Personnel handling Credit Risk areas, strong internal communication across the various departments in the Bank which facilitate the e) Measuring Credit Risk i. Probability of default (PD): Probability of default refers to the probability/risk/chance of a borrower defaulting on the payment of the credit obligations. ii. Exposure at Default (EAD): Exposure at Default refers to the amount that is exposed to the default risk. iii. Loss Given Default (LGD): Loss Given Default refers to the loss suffered in the event of a default of an exposure.

Credit Risk can be measured using structural models like Merton model or using Ratings-based model or using Actuarial Models or using Macroeconomic Models or using Credit Risk Models. g) Credit Risk Models Saunders and Cornett (2007) stated that credit scoring models use data on observed borrower characteristics either to calculate the probability of default or to borrowers into different default risk classes. The most prominent credit scoring models is the Altman's Z-Score model.

Altman's Z-Score: The Z-score formula for predicting Bankruptcy of Dr. Edward Altman (1968) is a multivariate formula for measurement of the financial health of a company and a powerful diagnostic tool that forecast the probability of a company entering Bankruptcy within a two year period with a proven accuracy of 75-80%. The Altman's credit scoring model takes the following form: Z = 1.2X21+ 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5 (1) Where, X1 = Working capital/ Total assets ratio, X2 = Retained earnings/ Total assets ratio, X3 = Earnings before interest and taxes/ Total assets ratio, X4 = Market value of equity/ Book value of long term debt ratio and X5 = Sales/ Total assets ratio.

The higher the value of Z, the lower the borrower's default risk classification. According to Altman's credit scoring model, any firm with a Z-Score less than 1.81 should be considered a high default risk, between 1.81-2.99 an indeterminate default risk, and greater than 2.99 a low default risk.

Because of the above factors depicted in the literature review it is essential that all the risk managers should be trained on Credit Risk.

The research work employed is an experimental design. Primary data has been collected through a survey method using a structured questionnaire which was administered to the Operating Personnel working in the Risk Management capacity in general and Credit Risk in particular. Interview method was also used for the study. Secondary data sources like annual reports, annual accounts, bank's prospectus, Central Bank's (RBI's) guidelines and BIS (Bank for International Settlements) guidelines have been used as references. The population size is around 1500 (One Thousand Five Hundred) and the sample size is 360 (Three Hundred and Sixty). The sampling unit was mainly the Operating Personnel in the capacity of Credit Risk Managers, Senior Credit Risk Managers and General Managers and above. The sampling technique used was a purposive sampling or judgmental sampling. Three Public Sector Banks, three Private Sector Banks and three Foreign Banks have been chosen. A 5-point Liker Scale has been used to carry out the research work with regard to the frequency of training activities ranging from: 1 being 'not at all', 2 being '1-2 times',3 being '3-4 times',4 being '5-6 times' and 5 being 'more than 6 times'. 7. Continuous assessment of counterparty and portfolio to identify a non-performing asset or a loan. 8. Borrowers should be duly informed of the regulatory procedures involved in obtaining a loan and as well as the penalties in case of a default.