SBI to start digitizing legacy monitoring of stressed assets to support recovery

Mumbai: State Bank of India (SBI) has started digitizing its stressed asset tracking systems to improve recovery and supervision, according to a senior bank official aware of the development. It is the last major business vertical at the nation’s largest lender that has yet to be fully digitized.

The project, known internally as the Stressed Asset Lifecycle Management System, has been under development for the past six months and is expected to go live in January 2027. Once operational, it will consolidate key details of legacy stressed accounts into a single dashboard, enabling real-time tracking, faster decision-making and better oversight of bad loan recovery across the bank.

“That will make it possible SBI management to review what stage each stressed asset is in and what kind of recovery efforts are underway. That is not possible now,” a senior bank official told Mint under the condition of anonymity.

The platform will aggregate all relevant information on legacy non-performing assets (NPAs), including account status, litigation, recovery and case-level developments, allowing officials to centrally monitor progress and reduce delays caused by fragmented processes.

The move comes at a time when SBI has significantly improved its asset quality over the past few years, but continues to manage a sizeable stock of older stressed accounts.

Since March, the gross non-performing assets of the bank amounted to ₹73,452 crore, down from ₹76,880 crore in the same period a year ago. The gross NPA ratio improved to a two-year low of 1.49% from 1.82% a year ago, while the net NPA ratio stood at 0.39% from 0.47%, reflecting sustained recoveries and tighter underwriting standards.

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Stable management of stressed assets

Sizable chunks of bad loans as of March 31 include those from sectors such as trading, telecom, roads and ports. Most of ₹73,452 crore bad loans are from the unclassified sector and are labeled as ‘others’ in the bank’s FY26 annual report. This category has bad credit ₹52,947 crore, representing 72% of the fund.

In FY26, SBI wrote off ₹17,803 crore in dud assets, as against ₹20,309 crore in FY 25. He recovered the value of the loans ₹10,054 crore in FY26 from previously written off accounts compared to Rs ₹8,002 crore in FY 25. Banks are writing off loans to be prudent and can resume recovery at any time. After recovery, these loans are reported as “income from written-off accounts” and form part of other income in the income statement.

After years of living with a painful backlog of stressed loans, India’s banking sector has cleaned up its act in recent years. RBI data showed that the bank’s asset quality improved in FY26, with gross NPA at a multi-decade low of 1.8%. Improvements in asset quality were widespread across banking groups, the RBI said in its June 30 financial stability report.

At India’s largest bank, the proposed dashboard is expected to improve accountability by providing visibility into the status of each stressed account, streamlining recovery efforts and reducing procedural hurdles that often delay the resolution of long-pending cases.

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Digital sweep

Nirmal Gangwal, founder of Brescon, a Mumbai-based family office and veteran of financial turnaround and restructuring, said digitization could solve one of the biggest problems associated with legacy bad loans.

“The problem in the older NPA is that no one wants to make decisions. It’s a question of accountability. Since the size is very small, no officer wants to stick his neck out. This leads to procedural delays and many layers of approvals. In such a situation, digital is the best way to go,” he said.

“At least decisions are taken, the process is streamlined and whatever the outcome is, it’s fine because nobody has a vested interest. I feel it’s a good move,” Gangwal said.

The move echoes SBI CEO Ashwini Kumar Tewari’s July 2022 interview with Mintin which he talked about using technology and analytics to improve the monitoring of stressed assets as part of the bank’s digital push.

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Key things

SBI is digitizing the last major vertical: legacy asset tracking and recovery.
The new dashboard consolidates NPA data and will be launched from January 2027 for SBI.
Gross NPA ratio hit a two-decade low of 1.49% for SBI.
The majority of bad loans, 72%, are in the unclassified “other” category.
The RBI reports a multi-decade low gross NPA in the Indian banking sector at 1.8%.