The banking industry is a crucial provider of financial services that supports development plans by directing money toward useful projects, mediating the flow of money from surplus to deficit units, and assisting with the fiscal and monetary policies of the government. However, Non-Performing Assets had previously been the main source of concern for the banking sector. The lowering of NPAs is currently a crucial concern for banks. A thriving country's economy depends on a robust cooperative banking sector. In this research paper, an effort has been made to examine how NPAs are managed in the H.P. State Co-operative Bank and the factors that influence them. Through this, it has been discovered that the absence of the right to choose the borrower was the primary factor at the appraisal stage, and that bank officials are dealing with issues like incomplete and problematic legal documentation, political pressure, etc. at the sanctioning and disbursement stage. And in the post-disbursement stage, the main causes of NPAs are the borrowers' failure to provide stock and other mandatory monthly statements and their money-diversion. It is not being monitored properly.