ABSTRACT:
Every business activity including bank's is all about results, the best results interns of profit and development depends on the organization's internal (for example: Employees) and external (for example: customers) better relationships. Following ethics and transparency measures only builds better relations especially for Financial Institutions like Banks. Few decades back Indian government taken a decision to nationalise more banks with an objectivity to spread the banking services to the nook and corner of the country. In addition to this as per the recommendations of M. Narasimham committee Reserve bank of India (RBI) introduced the concept of Priority Sector Lending practices for the banks and fixed a target of at least 40%of the bank's credit must be given to selected group under Priority sector. Behind this two revolutionary decisions is to boost up the bank's profits as well as to achieve balanced economic growth, but due to the increasing percentage of bad debts became a hurdle for the banks in delivering their planned services to the target groups. In this paper the ratio of bad loans on Priority sector Lending by the scheduled banks highlighted and reasons for happening of NPAs evaluated with some suggestible methods to avoid them. .