Non-performing assets has become a problem for the banking industry in India in particular and world in general. Banks are working with policies and assessment of the borrower and their repayment capacity based on the expected financial performance of the borrower. Borrowers also looking at market conditions, demand supply for their products and financial viability of their ventures. Even after all these evaluations, banks are facing the issue of Nonperforming assets.

Purpose: The present case is a real situation faced by a consortium of banks in combined Andhra Pradesh by lending term loans to a company and the situation thereafter. The purpose of the case is to discuss where the things are going wrong between the lender and borrower and who is responsible?

Scope: Similar situation might be happening in other states and with other banks and borrowers. This case discussion may be relevant to such situations and find a way to tackle the situation. Such discussions will help in enlightening the lenders and borrowers in future.

Conclusion The analysis reveals that failure of the banks to appraise the expansion project in ensuring techno economic viability and post monitoring of the implementation are the causes for the productive activity becoming non performing.

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Keywords: NPAs, Term Loans, Defaulters, Substandard Asset.