Non‑Performing Assets (NPAs) represent a critical challenge affecting the stability, efficiency, and profitability of banking systems worldwide. In India, Public Sector Banks (PSBs) have historically faced high NPA levels, raising concerns among policymakers, regulators, and financial analysts. This research article comprehensively examines the dynamics of NPAs in Indian PSBs — exploring their determinants, magnitude, trends, impacts on financial performance, and policy responses. Using data from 2008–2024, bank financials, Reserve Bank of India reports, and secondary literature, this study employs quantitative analysis and comparative assessment to identify patterns and underlying causes of asset quality deterioration. The findings highlight structural weaknesses — such as credit risk management gaps, economic shocks, and sectoral credit concentration — while suggesting strategic recommendations to enhance recovery mechanisms, strengthen governance, and improve risk mitigation frameworks. The study concludes with implications for regulatory policy, banking operations, and future research. The analysis reveals that economic downturns and policy shifts significantly exacerbate NPA accumulation, impacting asset quality across various sectors. Additionally, governance lapses and inadequate credit appraisal systems contribute to persistent non-performing loans within PSBs. Addressing these challenges requires an integrated approach combining regulatory oversight, enhanced risk assessment, and proactive recovery strategies.