Every country has to undergo from the continuous process of development. Banks play a vital role in this process. The Indian banking system has progressed as a powerful mechanism of planning for economic growth. Banks channelize savings to investments and consumption. Through that, the investment requirements of savers are reconciled with the credit needs of investors and consumers. NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net- worth of banks. NPAs affect the liquidity and profitability. The problem of NPAs is not only affecting the banks but also the Indian economy. In fact high level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. It is necessary to trim down NPAs to improve the financial health in the banking system. For the study data has been collected from secondary sources. An attempt is made in this paper to understand NPA, the status and trend of NPAs in public and private sector banks of India. The factors contributing to NPAs, are the reasons for high impact of NPAs on banks in India and recovery of NPAs through various channels.

KEYWORDS:  Credit Risk Management, Non-Performing Assets, Know Your Customer (KYC).