Banking sector is an important attribute of a flourishing economy. The efficiency and stability of banking sector affects the growth of economy. The non performing assets have direct impact on the profitability of the banks. It expresses the efficiency with which bank can utilize its total resources. Growth in NPA involves necessity of provisions which decreases the profit of bank and thus shareholder value. It also reflects state of health of industry and trade in economy. This paper deals with understanding the concept of NPA, its present status in public sector banks along with reasons. Recommendations are made in the end focusing that public sector banks need to effectively control their rising NPA levels in order to induce profitability in their balance sheets by appropriately analyzing the credit worthiness of borrowers, recognizing the critical accounts at early stage and using legal course of action preemptively.

Keywords: NPA; Indian Economy; Public Sector Banks; Profitability; Credit Monitoring.