For any country banking sector plays a pivotal role for the nation’s growth. That is why, whatever happens in the banking sector, it affects the economy. Indian banking sector has been facing a serious issue regarding the increasing levels of Non-Performing Assets (NPAs) which may affect the economy adversely. In this paper, impact of the non-performing assets on the customers of the private sector banks specifically borrowers are studied. Data is collected from RBI website. Panel data analysis is conducted for achieving the objective. Fixed Effect Model is found the best fit for the Private Banks. The overall fit was found significant at 1% level. The study finds a significant negative impact at 1% level in private sector banks. Thus, NPA may be the final deciding factor for private sector banks to avoid a similar reduction in the lending rates after the policy rate cuts. Thus, for the private sector banks, the borrowers are devoid to receive the benefit of Repo rate cut due to NPA.

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Keywords: Non-Performing Assets, Private Sector Banks, Panel Data Analysis, Borrowers, Repo Rate.

JEL Code: C23, E58, G21