Post-Financial Crisis Success: NPL Resolution Strategies Adopted by Commercial Banks – A Qualitative Study.

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.