NEW DELHI: State Bank of India recovered more than Rs 10,000 crore from written-off loan accounts during FY26, using multiple bad-loan resolution mechanisms, including the Insolvency and Bankruptcy Code (IBC), one-time settlements and asset sales to reconstruction companies.
According to SBI’s annual report, recoveries from written-off accounts rose to Rs 10,054 crore during FY26 from Rs 8,002 crore in the previous financial year, even as the country’s largest lender continued to carry a sizeable stock of legacy stressed assets on its books.
The bank’s written-off loans, classified as Advances Under Collection Account (AUCA), stood at Rs 1.61 lakh crore as of March 31, 2026, down from Rs 1.71 lakh crore a year earlier. AUCA accounts are fully provided bad loans that are technically removed from the balance sheet but remain under active recovery efforts.
During FY26, SBI wrote off fresh loans worth Rs 17,803 crore.
The annual report showed that a substantial portion of the AUCA pool consists of old legacy accounts accumulated over the years. Of the total AUCA balance, loans worth Rs 25,528 crore are over 10 years old, while Rs 86,157 crore fall in the five-to-10-year category. Loans less than five years old account for Rs 49,228 crore.
The bank said recoveries from written-off accounts remain a key focus area for its stressed assets resolution group (SARG), which works on maximising value through cash recoveries, restructuring, resolution and reduction in provisioning burden.
SBI highlighted the increasing role of the Insolvency and Bankruptcy Code in the recovery ecosystem, describing it as an effective and time-bound mechanism for stressed asset resolution through the National Company Law Tribunal (NCLT).
As of March 31, 2026, the lender had referred 1,247 cases under the IBC framework, of which 1,006 were admitted by the NCLT. Resolution plans were approved in 293 cases, while liquidation orders were passed in 549 cases.
The bank, however, did not disclose the exact amount recovered specifically through IBC resolutions.
Apart from the insolvency route, SBI continued recoveries through one-time settlement (OTS) schemes, SARFAESI proceedings, Debt Recovery Tribunals (DRTs), compromise settlements and sale of bad loans to the National Asset Reconstruction Company Ltd (NARCL) and other asset reconstruction companies (ARCs).
During FY26, SBI sold 355 stressed accounts with aggregate principal outstanding of Rs 5,204.95 crore to ARCs and permitted transferees for a total consideration of Rs 2,071.16 crore. Of this, Rs 1,315.37 crore was received upfront in cash while Rs 755.79 crore came in the form of security receipts.
The bank said these resolution mechanisms helped improve overall asset quality and free up capital for fresh lending.
SBI’s gross non-performing assets (NPAs) declined to Rs 73,452 crore at the end of FY26 from Rs 76,880 crore a year earlier, while the gross NPA ratio improved to 1.49% from 1.82%.
The lender also reported total recoveries and upgradations of Rs 9,429 crore during the year.
Banking sector experts said the rise in recoveries from written-off accounts indicates that lenders are increasingly using a combination of legal, insolvency and market-led mechanisms to monetise bad assets rather than relying solely on provisioning and write-offs.
The improvement also reflects the maturing of India’s stressed asset resolution ecosystem, especially after the introduction of the IBC and the creation of institutional bad-bank structures such as NARCL.
SBI said sustained economic growth, improved corporate balance sheets and stronger recovery infrastructure are helping accelerate stressed asset resolution across sectors.