Abstract: Higher level of NPA forced the banks to charge higher PLR and PLR related interest rates. This will attract high-risk borrowers which, in turn, may result in higher level of non-performing advances in future. Large borrowers are found to be the principal defaulters. Mismanagement or diversion of fund is also one of the main cause of NPA. The position of Orissa which was at the bottom of major states in June,1969 rose up to 11th position in June,1982. States like Bihar, Assam, Uttarpradesh and even West Bengal which were ahead of Orissa in 1969 came down to lower positions in bank population ratio, in June 1982. The study is based on primary data. The data has been analyzed by percentage method. The tool used to collect data from the bank officials was a structured questionnaire. Responses obtained from the 50 Bank Managers/ Senior officers.