Perception of Risk and Credit Appraisal Practices among Loan Officers of Public Sector Banks in Meerut Division

Abstract

This study has discussed the connection between risk perception and credit appraisal practice by loan officers of the public sector banks (PSBs) in Meerut Division of the state of Uttar Pradesh in India. The aim of the study was to examine the role of the professional experience of officers on their knowledge of the lending risk and the diligence of their credit appraisal conduct. It was a quantitative, descriptive, and inferential study, where data gathered in form of a structured questionnaire was used on officers in the major PSBs. The results showed that the loan officers, in general, proved to be highly aware of credit risk, and aligned with appraisal standards. More mature officers were more sensitive to risk and their appraisal practices were more systematic, which emphasizes the role of exposure to professional practices in decision-making. The study found a positive relationship between risk perception and credit appraisal rigor, which proved that behavioural and experiential factors have a contingent influence on lending practices. The study shows despite digital tools and regulatory reforms contributing to procedural soundness, human judgment, experience and behavioural training are the core of the process of effective credit risk management in the banking of the public sector.