India’s public sector banks, often criticised for mounting written-off loans, recovered more than Rs 35,000 crore from bad and technically written-off accounts in FY2025-26, according to annual reports and investor presentations of state-owned lenders.
The banks deployed a wide range of recovery tools — from bankruptcy courts and property auctions to one-time settlements, and Lok Adalats— underscoring the scale and sophistication of their recovery machinery.
At the country’s largest lender, State Bank of India (SBI), recoveries from written-off accounts rose to Rs 10,054 crore in FY26 from Rs 8,002 crore in FY25. Recoveries from its Advances Under Collection (AUC) account — the pool of fully written-off loans that the bank continues to pursue — stood at Rs 17,551 crore during the year, compared with Rs 20,342 crore in FY25.
SBI’s stock of written-off loans stood at Rs 1.61 lakh crore as of March 2026. Of this, Rs 25,528 crore was over 10 years old, Rs 86,157 crore was between five and 10 years old, and Rs 49,228 crore was up to five years old. Despite the large stock, fresh write-offs in FY26 were limited to Rs 17,551 crore, the lowest in six years, compared with Rs 34,403 crore in FY21 at the peak of the NPA cycle.
For large corporate accounts, SBI continues to rely heavily on the Insolvency and Bankruptcy Code (IBC) route. The bank has referred 1,247 cases to the National Company Law Tribunal (NCLT), of which 293 resulted in approved resolution plans while 549 ended in liquidation.
For mid-sized stressed assets, SBI assigned 355 accounts with outstanding principal of Rs 5,205 crore to asset reconstruction companies (ARCs) and permitted transferees during FY26, recovering Rs 2,071 crore — comprising Rs 1,315 crore in cash and Rs 756 crore in security receipts. Another 337 accounts worth Rs 689 crore were sold as portfolio pools for Rs 215 crore in cash.
For small-ticket borrowers, SBI continued to use its Rinn Samadhan compromise settlement scheme alongside Lok Adalats.