SBI to digitise legacy stressed asset monitoring to boost recoveries

SBI to digitise legacy stressed asset monitoring to boost recoveries

SBI to digitise legacy stressed asset – Mumbai — A significant shift is underway at India’s largest bank, State Bank of India (SBI), as it prepares to implement a digital overhaul of its stressed asset tracking processes. According to an unnamed senior official, this initiative will improve transparency and accelerate loan recovery, marking the final major area of the bank’s operations to undergo full digitisation.

The system, referred to internally as the Stressed Asset Lifecycle Management System, has been in development for six months and is set to launch in January 2027. It will unify data from older distressed accounts into a centralized dashboard, enabling real-time analysis and more efficient management of non-performing assets (NPAs) across the bank’s network.

“With this platform, executives will be able to see the current status of each asset and track ongoing recovery initiatives. That level of detail isn’t accessible today,” the official shared with Livemint under anonymity. The dashboard aims to streamline workflows, cut down delays, and foster greater accountability in handling bad loans.

Digital Integration for Legacy Assets

As SBI has seen a marked improvement in its asset quality over recent years, the new system will focus on consolidating fragmented information about legacy NPAs. This includes details like account conditions, legal actions, recovery steps, and progress updates, allowing officials to oversee the process more effectively.

Current figures show SBI’s gross NPA ratio has fallen to a two-decade low of 1.49%, compared to 1.82% in the same period last year. Net NPAs also dropped to 0.39%, down from 0.47%, reflecting ongoing efforts to reduce bad debt and enforce stricter lending practices.

“Legacy NPAs often stall due to lack of decision-making. The small size of these accounts discourages officers from taking initiative, leading to delays and multiple approvals. Digitising the process ensures decisions are made swiftly and objectively,” said Nirmal Gangwal, a veteran in financial restructuring.

Gangwal, founder of Mumbai-based Brescon, emphasized that the transition to digital tools would resolve key challenges in managing older loans. He noted that the system would eliminate bottlenecks and promote a more unified approach to asset recovery.

Broader Sector Trends

According to Reserve Bank of India (RBI) data, the entire Indian banking sector experienced a notable reduction in gross NPAs during fiscal year 2026, reaching a multidecadal low of 1.8%. This trend was consistent across all major bank groups, as highlighted in the RBI’s Financial Stability Report released on 30 June.

Despite this progress, SBI still manages a substantial volume of older bad loans, primarily from unclassified sectors labeled as ‘others.’ These account for 72% of the total NPA pool, amounting to ₹52,947 crore as of March. While the bank wrote off ₹17,803 crore in FY26, it also recovered ₹10,054 crore from previously written-off accounts, a rise from the previous year’s ₹8,002 crore.

Strategic Implications

The initiative aligns with SBI managing director Ashwini Kumar Tewari’s vision, discussed in a 2022 interview with Livemint, to leverage technology for better monitoring of stressed assets. This step underscores the bank’s commitment to modernizing its operations and enhancing efficiency in recovery processes.