Agricultural sector occupies a key position in the Indian economy. It provides employment to about 65 per cent of the working population of India. Around one-quarter of India’s National income originates from the agricultural sector. It is imperative that the problems of farmers are addressed with a sense of urgency. Agriculture being a State subject, the bulk of public investment in agriculture takes place at the level of States and the Central Government supports the States as a catalyst. On the basis of difference in the socio-economic characteristics of the borrowers, linear discriminant analysis was used to classify the borrowers into defaulters and non-defaulters and again the defaulters were classified into willful defaulters and non-willful defaulters. The exact amount of non-performing assets and over dues percentage wise as well as absolute amount-wise are going on increasing. The bad and doubtful debts.