Mumbai: State Bank of India (SBI) has begun digitising its stressed-asset tracking systems to improve recovery and oversight, according to a senior bank official aware of the development. This marks the last major business vertical at the country’s largest lender that is yet to be fully digitised.
Internally known as Stressed Asset Lifecycle Management System, the project has been under development for the past six months and is expected to go live by 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 improved oversight of bad-loan recovery across the bank.
“This will allow SBI executives to check at what stage each stressed asset is and what kind of recovery efforts are ongoing. This is not possible right now,” the senior bank official told Mint on the condition of anonymity.
The platform will bring together all relevant information on legacy non-performing assets (NPAs), including account status, legal proceedings, recovery actions, and case-level developments, allowing officials to monitor progress centrally and reduce delays caused by fragmented processes.
The move comes as SBI has sharply improved its asset quality over the past few years, but continues to manage a sizable stock of older stressed accounts.
As of March, the bank’s gross non-performing assets stood at ₹73,452 crore, down from ₹76,880 crore in the same period a year ago. The gross NPA ratio improved to a two-decade 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.
Steady housekeeping of stressed assets
Sizeable bad-loan chunks as of 31 March include those from sectors such as trading, telecom, roads, and ports. The majority of the ₹73,452-crore bad loans are from an unclassified sector and termed ‘others’ in the bank’s FY26 annual report. This category has bad loans of ₹52,947 crore, accounting for 72% of the pool.
In FY26, SBI wrote off ₹17,803 crore in dud assets, as against ₹20,309 crore in FY25. It recovered loans worth ₹10,054 crore in FY26 from accounts previously written off, compared to ₹8,002 crore in FY25. Banks write off loans to be prudential and are free to pursue recovery at any time. When recovered, these loans are shown as ‘recovery from written-off accounts’ and form part of its other income in the profit and loss statement.
After years of living with a painful pool of stressed loans, the Indian 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 multidecadal low of 1.8%. The improvement in asset quality was broad-based across bank groups, RBI said in its Financial Stability Report on 30 June.
At India’s largest bank, the proposed dashboard is expected to improve accountability by making the status of each stressed account visible, streamlining recovery efforts, and reducing procedural bottlenecks that often delay the resolution of long-pending cases.
The digital sweep
Nirmal Gangwal, founder of Brescon, a Mumbai-based single-family office and a financial turnaround and restructuring veteran, said that digitisation could address one of the biggest challenges associated with legacy bad loans.
“In a legacy NPA, the problem is that nobody wants to take a decision. It’s an accountability issue. Because the size is very small, no officer wants to stick his neck out. That leads to procedural delays and multiple layers of approvals. In such a situation, digital is the best way,” he said.
“At least decisions are taken, the process is streamlined, and whatever the outcome is, it’s okay because nobody has a vested interest. I feel it’s a good move,” Gangwal said.
The move echoes SBI managing director Ashwini Kumar Tewari's July 2022 interview with Mint, in which he spoke about using technology and analytics to improve monitoring of stressed assets as part of the bank's digital push.
Key takeaways
- SBI digitises last major vertical: legacy stressed asset tracking and recovery.
- New dashboard consolidates NPA data, launching by January 2027 for SBI.
- Gross NPA ratio hits two-decade low of 1.49% at SBI.
- Most bad loans, 72%, sit in unclassified ‘others’ sector category.
- RBI reports multidecadal-low 1.8% gross NPA across Indian banking sector.