YES Bank offloads 31,659 bad loan accounts ARCs in FY26

YES Bank has sharply pared its bad loan stock in FY 2025-26, with gross non-performing assets (GNPA) falling to 1.3% of advances from 1.6% a year earlier and net NPAs (NNPA) declining to 0.2% from 0.3%, according to the bank’s Integrated Annual Report for FY 2025-26, filed with stock exchanges on Thursday. The improvement placed the private lender “in the top quartile within its peer set,” the bank said, with its Provision Coverage Ratio (PCR) — the cushion held against potential loan losses — steady at a healthy 81.9%.

As part of the clean-up, YES Bank offloaded 31,659 stressed loan accounts with a gross value of ₹568.53 crore to asset reconstruction companies (ARCs) during the year. The net book value of these exposures was ₹25.64 crore, and the bank recovered consideration of ₹76.17 crore on the sale — realising roughly three times the exposures’ carrying value.

Note: By the bank’s own disclosure, no accounts were resolved through the IBC route in either FY26 or FY25 — the one resolution that did happen (₹62 crore) was a restructuring/ownership change outside the IBC process.

Separately, YES bank wrote off ₹2,219.43 crore in technical/prudential write-offs during the year, while recovering ₹617.14 crore from accounts previously written off in earlier years.

The asset-quality gains were driven by a slowdown in fresh slippages rather than one-off clean-ups. The gross slippage ratio — new accounts turning bad during the year — improved to 1.8% from 2.1% in FY 2024-25, which the bank attributed largely to a pull-back in retail asset slippages, which fell to 3.5% from 4%. Segmental GNPA in the Corporate and Commercial Banking books stood at 0.6%, the bank said.

Overall credit costs — provisions set aside as a proportion of advances — fell to 0.2% for the full year from 0.3% in FY 2024-25. Provisions specifically earmarked for NPAs dropped 30.8% year-on-year, to ₹1,993.01 crore from ₹2,878.72 crore, even as the bank’s standard advances book grew to ₹2,45,388.33 crore.

The bank’s management framed the improvement as part of a longer arc since its 2020 reconstruction. “The Gross NPA ratio has been rebuilt from a peak of 16.8% to just 1.3%,” the report said, with annualised Return on Assets also climbing to 1.0% in the fourth quarter of FY 2025-26 — its highest since the bank’s near-collapse and central-bank-led rescue.

The asset-quality turnaround coincided with two rating upgrades during the year: Moody’s raised YES Bank’s long-term issuer rating to Ba1 (Stable), while S&P Global Ratings assigned the bank an inaugural international issuer rating of BB+ (Stable). Domestic rating agencies converged at AA-.

Capital buffers also strengthened, with the bank’s CET-1 ratio at 13.8% and overall Capital Adequacy Ratio (CRAR) at 15.3% as of March 31, 2026 — both above regulatory minimums.

The improved credit profile comes months after Sumitomo Mitsui Banking Corporation (SMBC) formally became YES Bank’s largest shareholder with a 24.9% stake, alongside State Bank of India’s continuing 10.8% holding — a partnership the bank’s management credited with reinforcing risk-management and governance capabilities during the year.

Also See: Insolvency sword hanging over Reliance Power