Financial system is the backbone of any economy as it has direct bearing on the economic growth of a country. Banks are the major stakeholder of economic development as banks has a requisite position in handling the savings and its circulation. The effective banking operation is simply based on effective risk management, transparency and accountability. Commercial banks play an indispensible role of intermediaries between the borrowers and the lenders to yield profit and catalyze growth of economy. Credit risk incurves due to borrower's glitch at the time of repayment of loan or to meet any contractual obligations which gives rise to the contingency of incurring loss. Credit risk is the most primeval risk associated with the bank’s modus operandi. Financial institutions, should handle the risk through and thorough in order to be long-lived in the highly uncertain world. The future of banking will indubitably place reliance on risk management dynamics.  In the long run, the only banks having efficient risk management system will be in the land of living. Credit risk management in banks is important to keep on with the credit risk exposure within proper and acceptable parameters. As banks manage their risk better, they will get advantage to operate banking functions effectively and to increase their performance (return). This paper will try to evaluate the Credit Risk Management (CRM) practices of Indian public sector banks in grant of commercial loans to find the grey areas which need review and restructuring to improve banks’ asset quality. For this purpose, capital adequacy ratio (CAR) and non-performing assets (NPAs) has been taken into consideration to measure the efficiency of banks. The CAR and NPAs are credit risk management indicators.

___________________________________________________________________________________

Keywords: Credit Risk Management (CRM), Banking Performance, Primeval Risk, NPA and CAR.