CRM practices: A survey of banks and financial institutions

This study analyzes current Credit Risk Management (CRM) practices. A quantitative survey design was employed to collect data on credit risk practices. Closed-ended questionnaires were distributed to 600 employees in banking and financial institutions in Punjab, Pakistan, yielding 540 responses (response rate: 67%). Respondents comprised credit department employees from commercial banks, specialized institutions, and development financial institutions. The results show that the most of the employees working in the aforementioned department have a clear understanding of practices being used in the CRM. However, the board of directors clearly outlined the responsibility and authority for risk management practices which are clearly understood by the stakeholders. The internal stakeholders understood that management of the risk is crucial to the performance and attainment of the financial sector success. Furthermore, early identification of the credit default system put the loan on the watch list for monitoring and taking immediate corrective actions. These findings will help improve CRM practices in the banking and financial system.