The Indian banking sector which came out of 2008 global financial crisis relatively unscathed has been underperformed since 2010-11 which is less because of the financial crisis but more because of domestic and other global factors. The asset quality of bankshave been deteriorated and the various prominent reasons are economic slowdown, inflation, indecisiveness of government at various levels, corruption and increase in the frequency of disasters. Gross NPAs and Net NPAs increased to 3.2 percent and 1.7 percent respectively for the year 2012-13. In terms of NPAs, private sector banks have done better than public sector banks as their NPA ratios are lower. Undoubtedly, public sector banks stand on different plane and a single ratio is not enough to judge their performance;Asthere are an arm of the state as they help in accomplishing social goals and furthering political agenda of government at various levels. Indian banks have to innovate, dovetail risk management practices in their workflow and face an added responsibility of furthering the political agenda of governments, to design suitable system for asset quality management in order to make healthier.