It is essential to understand the impact of macroeconomic factors on non-performing assets (NPAs) on the performance of commercial banks, a key aspect of financial stability in a country. With this primary aim, the study was undertaken to analyze the impact of fiscal and monetary tools, along with domestic macroeconomic factors, on the Non-Performing Assets of Indian scheduled commercial public sector banks. It relies on secondary data sourced from the official websites of the Reserve Bank of India, the World Bank, and the International Monetary Fund, covering the financial period from April 2008 to March 2022, encompassing 14 years of analysis. The collected data have been analyzed by employing correlation and stepwise regression. The results indicate monetary tools, fiscal tools, and domestic macro-economic factors such as industry growth, exports, imports, government tax, statutory liquidity ratio, inflation, and government expenses were found to be the most significant variables, contributing 71.20% to the variation in non-performing assets (NPAs). This high contribution underscores the importance of these factors in understanding and managing NPAs. The feasible suggestions are provided for improving financial stability and reducing surging NPAs in the banking industry and for the Central Bank of India.