Aim To determine the prevalence and predictors of potentially inappropriate medications (PIM) prescribing in elderly inpatients using the modified American Geriatrics Society (AGS) updated Beers criteria 2012 and comparing it with the Beers criteria 2003. Methods The prospective observational study was carried out between September 2011 and May 2012 at a public teaching hospital. Elderly inpatients aged ≥60 years were included. Multivariate logistic regression analysis was used to determine the predictors of PIM prescribing. Results The results were based on data of 502 patients; more than half (60%) were males and 66% were aged between 60–69 years with a mean (standard deviation [SD]) of 68 (7) years. Mean (SD) number of diagnoses and medications were three (1) and nine (4), respectively. A total of 81 (16%) patients were prescribed with at least ≥1 PIM according to modified AGS updated Beers criteria 2012, compared with 11% according to Beers criteria 2003. On multivariate regression, important predictors for PIM prescribing were found to be age ≥80 years (odds ratio [OR] 2.46, 95% confidence interval (CI) 1.27–3.12; P = 0.03), male sex (OR 1.35, 95% CI 1.06–1.84; P = 0.03), more than three diagnoses (OR 2.47, 95% CI 1.59–3.39; P = 0.04), ≥6 medications prescribed (OR 1.16, 95% CI 1.02–1.35; P = 0.03) and ≥10 days of hospital stay (OR 1.59, 95% CI 1.09–2.31; P = 0.02). Conclusions The results show that PIM prescribing is common among hospitalized elderly Indian patients. It is feasible to reduce this practice through the provision of appropriate unbiased information to healthcare professionals. Geriatr Gerontol Int 2014; 14: 251–258.