AN IN-DEPTH EXAMINATION OF RISK MANAGEMENT PRACTICES IN INDIAN PUBLIC AND PRIVATE SECTOR BANKS

Abstract

Risk management has emerged as a critical function in the banking sector due to increasing financial complexity, regulatory requirements, and economic uncertainties. Indian banks, both public and private sector, operate in a dynamic environment exposed to various risks such as credit risk, market risk, liquidity risk, and operational risk. This paper presents an in-depth examination of risk management practices adopted by selected public and private sector banks in India. The study aims to analyze the frameworks, tools, and regulatory guidelines governing risk management and to compare the effectiveness of risk mitigation strategies across the two sectors. The analysis highlights significant differences in risk identification, monitoring mechanisms, technological adoption, and compliance culture. While public sector banks face challenges related to asset quality and legacy systems, private sector banks demonstrate relatively advanced risk management practices supported by technology and data analytics. The study concludes that strengthening governance structures, improving credit appraisal systems, and enhancing regulatory compliance can significantly improve the overall risk management efficiency of Indian banks.