Credit risk has always been a primary concern for financial services institutions but it is not always been very effectively managed. Credit risk is loss due to a party in an agreement not meeting its contractual financial obligation in a timely manner. RBI definition of credit risk Possibility of losses associated with decline in the credit quality of borrowers or counterparties. Default due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading, settlement and other financial transactions. Therefore, the main objective of the study on the concept of credit risk management policy of Yes Bank and credit risk management strategy in the Indian banking sector. The financial crisis that started in 2007 exposed the weaknesses of existing risk management systems among financial services institutions. There were shortcomings in the way many different firms of all sizes and regions were managing their credit risk. This was especially highlighted by complex and innovative products like mortgage-backed securities and collateralized debt obligations. Many firms had considerable exposure to these products without understanding the inherent risk. This resulted in huge losses as the prices of their investments fell. It also had a ripple effect as some of their counterparties, including large firms like Lehman Brothers, filed for bankruptcy or came close to, doing so and the banking policy was primarily influenced by the economic planning strategy formulated under different five- year plans where in banks were projected mainly as the provider of capital to various tasks and projects envisaged in the plans by suitable resource mobilization. Furthermore, under several sponsored government schemes in which banks were required to disburse soft and easy loans and financial assistance to poor and less developed sections of the augment in their income generation capability without proper and adequate security. Thus, credit risk is the risk that a counter party may fail to pay out on a deal when it is supposed to and counterparties that may cause a credit risk range from individuals to corporate firms to sovereign governments.