An empirical study on risk management strategies adopted by borrowers to prevent NPA status at banks

Abstract

newline Non-Performing Assets (NPAs) pose a significant challenge to the banking sector, newlineimpacting financial stability and economic growth. NPAs arise when borrowers fail to newlinemeet repayment obligations for a specified period, necessitating effective risk management newlinestrategies to prevent loan defaults (Reserve Bank of India [RBI], 2021). Borrowers adopt newlinefinancial and strategic measures such as income diversification, prudent financial newlineplanning, and insurance to mitigate default risks (Goyal and Aggarwal, 2020). Proactive newlinepractices like maintaining contingency reserves, debt restructuring, and leveraging newlinegovernment relief measures help sustain creditworthiness and avoid NPAs (Kumar and newlineSharma, 2019)