Stressed assets are a powerful indicator of the health of the banking system. Stressed debts are those debts which are doubtful to be repaid and generally 30 days have elapsed from the stipulated time of repayment. Usually stressed debts lead to NPA later on. All the NPAs are part of stressed assets. Stressed assets are super set while NPAs are subset. Stressed assets are the accounts which can/will become NPAs without proper monitoring in the very near future. NPAs reflect the performance of banks. A high level of NPAs suggests high probability of a large number of credit defaults that affect the profitability and net worth of banks and also erodes the value of the asset. The NPA growth involves the necessity of provisions, which reduces the overall profits and shareholders’ value. 

The issue of NPAs has been discussed at length for financial system all over the world. The problem of NPAs is not only affecting the banks but also the whole economy..  An attempt is made in this paper that what is NPA? The factors contributing to NPAs, reasons for high NPAs and their impact on Indian banking operations, the trend and magnitude of NPAs in selected Indian banks. There has been a spurt in NPA (both GNPA and NNPA) of both public sector and Private sector banks in the fiscal year 2018-19.

The primary reasons for the spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices, willful default/loan frauds/corruption in some cases, and economic slowdown. The government adopted a comprehensive 4R’s strategy consisting of recognition of NPAs transparently, resolution and recovering value from stressed accounts, recapitalizing PSBs, and reforms in PSBs and financial ecosystem to ensure a responsible and clean system. Change in credit culture was effected, with the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners and debarring willful defaulters from the resolution process and debarring them from raising funds from the market. 

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