The branch network of a commercial bank provides a platform for drawing customers for taking credit, and so the Credit Risk Management (CRM) practices need to be carefully chosen and implemented to ensure timely identification of credit risks across all branches and precise calculation/ measurement of aggregate credit risk, and to build appropriate systems and internal controls at head office such that acceptable level of credit risk is assumed by the banks’ branches at all times. The present study attempts to assess whether the size of branch network has significant impact on the diverse range of CRM practices followed by commercial banks in emerging economies by analyzing the data collected from 35 scheduled commercial banks in India, an emerging economy. The responding banks were categorized into wide, average and low branch network size on the basis of the number of branches of these banks and responses were sought with regard to a vast range of CRM practices relating to organizational structure, policy guidelines, targets defined in CRM strategy, credit risk rating model, monitoring practices, risk estimation procedures and other operations and systems at portfolio level through a structured questionnaire. The findings reveal that there is no significant difference in CRM practices of banks with varying size of branch network. Another important inference is that as the size of branch network increases, the commercial banks prefer to follow the approach of higher degree of specialization and centralization of authority in CRM. The study also infers that Indian banks with wide branch network are ahead of other sample banks with regard to the scope of CRM policy, credit risk analytical abilities and credit risk monitoring procedures. The findings indicate that size of branch network or emphasis on bricks-andmortar branches to deliver financial services in emerging economies, in particular India, has not served as a deterrent in following benchmark CRM practices. The study suggests further potential areas of improvement in CRM across Indian banks of varying branch network size, which has policy implications for bank management and regulatory authority alike.

The branch network of a commercial bank is an important platform for drawing customers for building loans and advances portfolio which constitute almost 60-70% of the assets side of balance sheet of any bank. The size of branch network provides strength, depth and clarity to a bank’s brand identity, which is the foundation on which a commercial bank undertakes lending activity. In emerging economies, branch expansion has always been promoted by policy makers and regulatory authorities. However, with the growth of automated transactions, the role of the branch network is changing and must reflect the Credit Risk Management (CRM) practices/strategies followed by bank management. Lepus (2004) a UK-based investment banking management consultancy, also suggested that best practices in CRM should demonstrate centralization, standardization and timeliness of risk management. In the above backdrop, investigation into association between CRM practices followed by a bank and size of its branch network seems to be an important area for research in banking and finance. The present study attempts to investigate the likely association between CRM practices and size of branch network in an emerging economy, India. The Indian banking sector provides adequate data for a study on this issue, since business per branch for Indian banking industry has risen steadily for the entire industry and for all bank groups since the early 1990s.

Financial Risk Management Journal, Credit Risk Management (CRM), Credit Policy and Process Management Committee (CPPC), Board of Directors (BoD), Risk Management Department (RMD), Branch Network, Credit Risk Management Practices, Indian Banking Sector.