Public Sector Banks (PSBs) play a vital role in India‘s economy. Public sector banks, which account for 72.7 per cent of the total banking assets in India, grew at an average of 73.7 per cent during the period 2010–14 (IBEF, 2015), have reported rapid deterioration in its profitability in the recent past. In this article an attempt is made to analyse the financial performance of the public sector banks and certain measures suggested by Government to revamp this ailing sector have been discussed. This paper explores the asset quality aspect of PSBs and finds that Non Performing Assets as a percentage of Net Advances have increased considerably over the past few years and also quite high as compared to Private Sector Banks. Profitability has suffered a lot due to recent clean up drive... initiated by RBI to write off Bad debts. The study also found that stocks of most of PSBs are trading below their book value which is a clear indication that if the bank is put up for sale it would not fetch the same value that is shown in its books.