The financial system in India comprises of Commercial Banks including Public Sector, Private Sector and Foreign Banks, Co-operative Banks, Development Finance Institutions (DFIs) and various other institutions in the areas of Insurance, Mutual Funds and Government Securities. Commercial Banks are playing a very important role in the financial system and payment systems. Banks are 'special' as financial intermediaries critical for mobilizing public saving and for deploying them to provide safety and return to savers. The deployment of funds mobilized through deposits involves Banks in financing economic activity and providing a lifeline for the payment system. The introduction of economic reforms gives greater flexibility and autonomy to banks in increasing their profitability, productivity and efficiency. The RBI is the central bank of the India which is the Monetary Authority of the country. The Slowdown in economic growth and rapid credit growth are independently associated with higher levels of NPA upon analyzing the banking sector in India, it is evident that the NPAs still pose a significant threat to the banking sector. In this research an attempt is made to examine the impact of SARFASI Act 2002 on the level of non-performing assets of State Bank of Patiala seven years before and after the enactment of the Act.