122 Impact of Non-Performing Assets (NPAs) on Financial Performance of Indian banking Sector Rashmi Kumari, Prabhat Kumar Singh, V.C. Sharma Abstract The purpose of this paper is to analytically examine the relationship between NPAs and financial performance (ROA) of selected public and private-sector banks. The data has been taken from the banks official websites, on the basis of market capitalization of listed public and private sector banks in India. Panel data regression model has been applied from 2013- 2017 to examine the impact of non-performing assets on financial performance of public and private sectors banks. Findings of the study reveals that there is significant and positive impact of GNPA over financial performance of Indian banking sector. Similarly the impact of NNPA on financial performance of Indian banking sectors having the same impact as GNPA. Overall the study found positive and significant impact of NPAs on the financial performance of banks. The present study develops the capacity for previous examinations related with non-performing assets and suggests the public and private sector banks to give attention on NNPA and GNPA of banks which influence the financial performance of both banking sectors. This study broadens the literature by examine the overall impact of NPAs on the financial performance of banks. Keywords: Financial performance, NPAs, Profitability, ROA Introduction Financial system of any economy plays important role in its economic development, and financial system comprises financial institutions. India is one of the largest countries in south Asia with massive financial system institutional and channel/ instruments. Nonperforming assets not only disturbs the profitability of banks but also spoil the asset quality of banks and leads to very difficult for bank survival (Narula and Singhla, 2014). Non-performing of asset of banks is one of the essential clue which is used for measurement of performance of the banks. NPAs have a direct impact on banks profitability (Joseph and Prakash, 2014). Banks profitability has exercised as the financial statements ratios return on assets (ROA) and return on equity (ROE). Other profitability measures include net interest income which is dividing by the average earning assets. NPAs flash the performance of banks. a huge level of nonperforming assets prefer high chances of a large number of defaulters that influence the profitability and net capital of banks also cuts down the value of assets. The NPA growth includes the essential of provisions which mark down the profits and ISSN 2320-4907 IISUniv.J.Com.Mgt. Vol.6(1), 122-133 (2017)