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Abstract
Banks plays an important role in the economic development of a country. Banks are growth-driver and the banking business is exposed to various risk, such as credit risk, liquidity risk, interest risk, market risk, operational risk and management risk. Apart from these risks the very important risk is loan recovery. The sound financial position of a bank depends upon the recovery of loans or its level of these assets. Reduced assets generally gives the impression that banks have strengthened their credit appraisal processes over the years and growth in this involves the necessity of provisions, which bring down the overall profitability of banks. The Indian banking sector is facing a serious problem of this sector. The magnitude is comparatively higher in public sectors banks. To improve the efficiency and profitability of banks need to
be be reduced and controlled. Hence an attempt to be made to understand and analyze the guidelines given by RBI.