The banking industry plays a critical role in the Indian economy. Measuring and maintaining the asset quality of banks is important for the development of the banking sector. Nowadays, the asset quality in banks, especially the Public Sector Banks is constantly
deteriorating and thus causing intolerable stress to the banking sector, regulators, and Indian economy. The objective of the present study is to understand the level of Non-performing Assets (NPA), and how it influences the profitability of the banks. For this purpose, the study considered Gross and Net NPA of 10 Public & Private sector banks from April 2014 to March 2018. The study identified that both the public and private sector banks gradually increase their Gross & Net NPA during the period. The study found that there is a significant positive relationship between Gross NPA and Net NPA of public and private sector banks. The study also found a significant negative relationship between NPA with Return on Assets (ROA) of public & private sector banks. The impact of ownership (public and private sector banks) significantly influences the Gross and Net NPA. The Gross NPA has a significant negative influence on ROA whereas, Net NPA has a positive influence on ROA of both public and private sector banks. So the study recommends to the regulators and respective bank officials to take the necessary steps to reduce the NPA and improve the recovery mechanism.