The NPAs are considered as an important stricture to judge the performance and financial health of banks. The level of NPAs is one of the drivers of financial steadiness and augmentation of the banking sector. The non-performing assets (NPAs) of new private sector banks seem to have gone up while others have managed to keep it under control. This paper focuses on studying the relationship of NPAs with profitability and the lending of private sector banks. The study is based on the secondary data retrieved from Report on Trend and Progress of Banking in India and from annual reports of private sector banks. The reporting period for this research is five years from 2003–04 to 2007–08. This study has tried to analyze the performance of private sector banks with respect to their NPAs which has been divided into two parts – banks with highest NPAs and banks with the lowest NPAs. The study is analytical in nature and the analysis has been made and the suggestions are proposed on the basis of this study.
