In India, the banking sector has a long history and tradition. However, the severity of the issue of bad loans of banks has not been taken seriously. Subsequently, following the recommendations of the Narasimham Committee and the Verma Committee, some steps have been taken in the balance sheets of banks to resolve the issue of old NPAs. It is becoming clear from every angle that there is hardly a formal assessment of the best way to deal with this problem. There can be no consensus on appropriate policies to address this issue. There is also little flexibility in enforcing NPA standards, as they have been accepted. Most so-called performing assets are non-performing loans. This is done by a bank or finance company that fails to pay on time or pay interest. A loan is a bank’s asset, as interest payments and principal repayments create a stream of cash flow. A bank makes its money by paying interest. There can be no consensus on appropriate policies to address this issue. As they acknowledge, there is little flexibility in implementing the requirements of the NPA. Non-performing assets are also called non-performing loans. A bank or investment firm does this without allowing timely payments or interest payments. Loan is an advantage for a bank as interest payments and repayments by borrowing create a cash flow. A bank is making money by paying interest. The current research paper focuses on the growing problem of bank’s NPAs and its impact on the economy.

KEYWORDS:  NPAs, Public Sector Bank, Basel Committee, Narasimham Committee.