【正文】 s portfolio in the Indian banking industry is close to ,00,000 crore which is around 6 percent of India’ s GDP2. The RBI has recently announced that the banks should not pay dividends at more than percent of their profit. It has further provided that the banks having NPA levels less than 3 percent and having Capital Adequacy Reserve Ratio (CARR) of more than 11 percent for the last two years will only be eligible to declare dividends without the permission from RBI3. This step is for strengthening the balance sheet of all the banks in the country. The banks should provide sufficient provisions from their profits so as to bring down the NPAs level to 3 percent of their advances. NPAs are the primary indicators of credit risk. Capital Adequacy Ratio (CAR) is another measure of credit risk. CAR is supposed to act as a buffer against credit loss, which isset at 9 percent under the RBI stipulation4. With a view to moving towards International best practices and to ensure greater transparency, it has been decided to adopt the ’ 90 days’ ‘ over due’ norm for identification of NPAs from the year ending March 31, 2020. The New Basel Capital Accord is scheduled to be implemented by the end of 2020. All the banking supervisors may have to join the Accord. Even the domestic banks in addition to internationally active banks may have to conform to the Accord principles in the ing decades. The RBI as the regulator of the Indian banking industry has shown keen interest in strengthening the system, and the individual banks have responded in good measure in orienting themselves towards global best practices. Credit Risk Management(CRM) dynamics: The world over, credit risk has proved to be the most critical of all risks faced by a banking institution. A study of bank failures in New England found that, of the 62 banks in existence before 1984, which failed from 1989 to 1992, in 58 cases it was observed that loans and advances were not being repaid in time 5 . This signifies the role of credit risk management and therefore it forms the basis of present research analysis. Researchers and risk management practitioners have constantly tried to improve on current techniques and in recent years, enormous strides have been made in the art and science of credit risk measurement and management6. Much of the progress in this field has resulted form the limitations of traditional approaches to credit risk management and with the current Bank for International Settlement’ (BIS) regulatory model. Even in banks which regularly finetune credit policies and streamline credit processes, it is a real challenge for credit risk managers to correctly identify pockets of risk concentration, quantify extent of risk carried, identify opportunities for diversification and balance the riskreturn tradeoff in their credit portfolio. The two distinct dimensions of credit risk management can readily be identified as preventive measures and curative measures. Preventive measures include risk assessment, risk measurement and risk pricing, early warning system to pick early signals of future defaults and better credit portfolio diversification. The curative measures, on the other hand, aim at minimizing postsanction loan losses through such steps as securitization, derivative trading, risk sharing, legal enforcement etc. It is widely believed that an ounce of prevention is worth a pound of cure. Therefore, the focus of the study is on preventive measures in tune with the norms prescribed by New Basel Capital Accord. The study also intends to throw some light on the two most significant developments impacting the fundamentals of credit risk management practices of banking industry – New Basel Capital Accord and Risk Based Supervision. Apart from highlighting the salient features of credit risk management prescriptions under New Basel Accord, attempts are made to codify the response of Indian banking professionals to various proposals under the accord. Similarly, RBI proposed Risk Based Supervision (RBS) is examined to capture its direction and implementation problems。 Objectives of the research: The present study attempts to achieve the following objectives: 1. Analysis of trends in NonPerforming Assets of mercial banks in India. 2. Analysis of trends in credit portfolio diversification during the postliberalization period. 3. Studying relationship between diversified portfolio and nonperforming assets of public sector banks vis224。vis other countries and highlight the importance of NPAs management. NPA is an advance where payment of interest or repayment of installment of principal (in case of Term loans) or both remains unpaid for a period of 90 days10 (new norms with effect from 31st March, 2020) or more. Trends in NPA levels: The study has been carried out using the RBI reports on banks (Annual Financial Reports), information / data obtained from the banks and discussion with bank officials. For assessing parativ