Abstract:
Non-Performing Loans (NPLs) are among the most prevalent issues
encountered by commercial banks, particularly after economic shocks, financial
crises and systemic shocks that destabilised the lending portfolio. As the
banking sector focuses on maintaining financial resilience and operational
efficiency, NPL resolution plays a vital role. This research explores the
resolution strategies adopted by commercial banks to manage and reduce NPLs,
focusing on the practical mechanisms, institutional reactions and managerial
actions that lead to successful loan recovery. This research adopts a qualitative
case study approach to investigate a few commercial banks through insights
from semi-structured interviews with bank managers, credit officers and risk
management experts; data were thematically analysed to uncover prevalent
patterns, strategic positioning and contextual factors that influence NPL
resolution. The study explores major approaches (loan restructuring, debt
recovery negotiations, collateral enforcement, write-offs) and how the
regulatory environment shapes NPL resolution strategies. The findings reveal
that successful NPL resolution is not absolute but contextual, depending on
institutional factors, borrower characteristics, macroeconomic conditions and
the regulatory environment. The study contributes to the body of knowledge on
banking management and financial stability and has policy implications for
bank managers, policymakers and regulators to improve NPL governance. The
study ultimately demonstrates how commercial banks can turn financial
disruption into success by adopting flexible, borrower-specific and policyoriented
resolution strategies.
