Credit risk management and resilience of indian banking sector

The role of information's processing in bank intermediation is a crucial input. The bank has access to different types of information in order to manage risk through capital allocation for Value at Risk coverage. Hard information, contained in balance sheet data and produced with credit scoring, is quantitative and verifiable. Soft information, produced within a bank produces more precise estimation of the debtor's quality. So this article focuses on various types of credit risk and what kind of risk Governance process can be used for risk management. The paper checks the resilience of the commercial banks in India with respect of credit risk, interest rate risk and liquidity risk which were studied through stress testing by imparting extreme but plausible shocks.