Banks in India appear to treat large corporate borrowers and small enterprises very differently when loans go sour. While big firms often receive massive credit with limited accountability, defaults by smaller businesses trigger aggressive recovery actions that can leave borrowers financially crippled. The recent insolvency case involving Essel Group chairman Subhash Chandra, founder of Zee, highlights this disparity and raises questions about whether powerful borrowers are held to the same standards as ordinary debtors.
The National Company Law Tribunal approved a resolution plan for Chandra’s personal‑guarantor case that would pay creditors just ₹6.25 crore plus ₹25 lakh for process costs against claimed liabilities of roughly ₹22,006.57 crore. Although creditors representing 80.81 % of the voting value backed the plan, several major lenders opposed it. The episode underscores a broader challenge for India’s banking system: separating genuine business failures from reckless lending, weak due diligence, and high‑level manipulation.
According to the Reserve Bank of India, 2,664 companies were classified as willful defaulters as of March 2024, with bank dues of about ₹1.96 lakh crore. Parliament was told that banks have written off ₹9.95 lakh crore in loans to large corporates over the past twelve financial years—writes that are not waivers, as borrowers remain liable. Past crises involving Videocon, DHFL, IL&FS and Jet Airways illustrate the scale of the problem, which stems largely from the credit boom of earlier years and has only recently been fully acknowledged.
Experts argue that India needs greater transparency in large‑scale lending, restructuring and settlement processes. Robust audit trails, independent reviews and clear documentation should accompany major exposures, while bank officials who act responsibly must be protected and those guilty of reckless practices should face proportionate penalties. The Chandra case offers a chance to assess whether the banking system can deliver not only recovery but also equal treatment, accountability and public‑money scrutiny for all borrowers.
