Due to increase in the credit flow of various sectors like infrastructure, industry, services and agriculture, there has also been an increase in the Non-Performing Assets (NPAs) in the Indian banking sector. This directly effect to the profitability, net worth and smooth functioning of the banks. The level of NPA is best indicator for assessing the health of banking sector of a country. The banks have to take initiatives to bring down the Non-Performing Assets. The growth of any economy depends on the stability of Banks, also the companies need to plan new projects as well as investments, and otherwise there will be no growth in the economy. In the current situation banks are unstable. In economic survey 2016, it was stated that bad debts exceeded the operating income of banks,  this means banks are at a huge risk, seeing this if depositors start taking out their money banks will have to be closed, and as a result new companies will not be able to start their business as banks will not able to fund them as banks will  start funding at a very low rate , which will result in low GDP growth, so twin balance sheet problem is the most critical challenge that will be faced by the economy and an obstacle in the economic recovery. Despite of being such a serious problem till now a perfect mechanism have not been identified. Gross NPA reflects the quality of the bank loans and the Net NPA reflect the actual burden of the banks. In this paper we will analyse the performance of public and private sector banks based on Gross NPAs and Net NPAs.

___________________________________________________________________________________

Keywords: Non-Performing Assets, Twin Balance Sheet Problem, Gross NPAs, Net NPAs.