This paper examines the effect of credit risk management on private and public sector banks in India. Credit risk occurs when customers default or fail to comply with their obligation to service debt, triggering a total or partial loss. The primary cause of credit risk is poor credit risk management. When banks manage their risk better, they will get advantage to increase their performance (return). For this purpose researcher has taken one dependent return on asset (ROA) and two independent variables capital adequacy ratio (CAR) and non-performing assets (NPAs). The ROA is performance indicator. The CAR and NPAs is credit risk management indicator. Researcher has applied two way regression model.
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