Strategic Risk Management and Sustainable Banking Performance: An Empirical Analysis of Non-Performing Assets in Indian Banks (2019–2023)

Abstract

The increasing level of Non-Performing Assets (NPAs) poses a significant challenge to the stability and sustainability of the Indian banking sector. NPAs reduce profitability, weaken capital adequacy, and constrain the lending capacity of financial institutions, thereby affecting economic growth. This study examines the role of strategic risk management practices in reducing NPAs and enhancing sustainable banking performance in India. Using secondary data from 20 public and private sector banks covering the period 2019–2023, the study applies descriptive statistics, correlation analysis, and multiple regression modelling to analyse the determinants of asset quality. The results reveal that Provision Coverage Ratio (PCR), Capital Adequacy Ratio (CAR), Return on Assets (ROA), and Risk Governance Score have significant negative relationships with Gross Non-Performing Assets (GNPA). Among these variables, governance emerges as the most influential factor in reducing NPAs, indicating that transparent risk disclosure, structured oversight mechanisms, and effective credit monitoring improve financial stability. The findings also show that private sector banks outperform public sector banks in managing credit risk due to stronger governance frameworks and technological adoption. The study concludes that strategic risk management is essential for improving asset quality, strengthening financial resilience, and ensuring long-term sustainability in the banking sector.