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Abstract
Banking sector successfully operates on the cycle of cash inflow and cash outfow. Any disturbance in this cycle may affect working of this sector. The major role of bank is to extend credit. Simultaneously it also has to successfully recover back the credit which is extended. In some cases the lender may have some doubts of recovery or there might be default on the part of the borrower regarding payment of installments continuously for a period of 90 days. Such doubtful of recovery or actual default is called as NPA.NPAs have direct impact on profitability and credibility of banks. NPAs are one of the unavoidable problems of any bank. Non-performing assets (NPAs) are those assets which do not earn interest income along with default in repayment of loan to bank as per the repayment schedule affecting income of the bank with the subsequent impact on the profitability. The non- performing assets ceases to generate interest but at the same time require banks to make provision for such non- performing assets out of their current profit further eroding their current profits.The term Non-Performing Assets was featured in the Indian banking sector after introduction of financial sector reforms in 1992 along with implementation of prudential norms on income recognition, assets classification and provisioning as per the recommendation of the committee on the Narsimham Committee. The stability and sound health of the banking system hence is necessary for