India’s Financial Meltdown: A Decade of Defaults, Bankruptcies and Economic Ruin
India’s Financial Meltdown: A Decade of Defaults, Bankruptcies and Economic Ruin
India’s Financial Meltdown: A Decade of Defaults, Bankruptcies and Economic Ruin
Posted on 13th March, 2025 (GMT 08:32 hrs)
Composed and Compiled by Partyless Society⤡ & Occupy Dalal Street⤡
ABSTRACT
India has faced widespread bankruptcies between 2015 and 2025, with significant failures in banks, non-banking financial companies (NBFCs), and large corporations, exacerbating core economic issues. The Insolvency and Bankruptcy Code (IBC) has largely failed, leaving citizens to bear the brunt time and again. Key examples include DHFL, PNB, IL&FS, PMC, Yes Bank, Essar Steel, and Jet Airways. Additionally, write-offs (waive offs?!) of corporate loans have surged, and bank fraud cases are on the rise, with rising defaults and poor recovery rates. The ongoing financial instability, caused by such frauds, defaults and bankruptcies, has eroded investor confidence, leading to massive sell-offs. This trend has contributed to market volatility, as institutional and retail investors face significant losses, further deepening the economic distress in terms of inevitable inflation and recession risks.
Over the past decade, India has experienced a wave of bankruptcies, especially among banks, shadow banks (NBFCs), and large corporations. Many citizens have lost their savings, and the consequences have been dire for public trust. Despite the introduction of the Insolvency and Bankruptcy Code (IBC) to resolve these issues, it seems many corporate debts have been written off, leaving the common man to bear the brunt of these failures.
What are the major bankruptcies that India faced between 2015 and 2025? Here’s a brief overview.
Notable Bankruptcies in India (2015-2025)
Bankruptcy perhaps remains a taboo in India, often concealed behind a illusory facade of success and corporate gains. The Insolvency and Bankruptcy Code (IBC) was introduced to enable creditors to recover debts through the National Company Law Tribunal (NCLT). However, the IBC, with its incoherent framework, has evidently failed to deliver its projected promises⤡!
Several significant bankruptcies have taken place over the past decade, resulting in substantial debts being written off and corporate failures often worsened by mismanagement or orchestrated fraud, frequently aimed at protecting the current ruling party’s profit motives or preserving its purported image during its politically motivated (vendetta?⤡) financial “attacks” or surgical strikes”⤡.
Here are some notable cases:
- DHFL “Scam” ($13.93B/Rs. 12,12,66,67,52,822): A so-called financial fraud (that did not happen, according to CBI’s 2025 closure report) exposed by Cobrapost led to a default and the alleged adverse takeover by Piramal Group.
- Bhushan Power and Steel ($6.9B/Rs. 6,00,67,48,45,260): Loans were misused, which eventually led to the acquisition by JSW Steel.
- Essar Steel ($6.9B/Rs. 6,00,67,48,45,260): A severe debt trap resulted in its sale to ArcelorMittal-Nippon.
- Lanco Infra ($6.3B/Rs. 5,48,44,41,59,550): Policy reversals and debt issues led to insolvency.
- Bhushan Steel ($6.2B/Rs. 5,39,73,86,96,700): Financial crises resulted in Tata Steel’s acquisition.
- Reliance Communications ($4.6B/Rs. 4,00,46,15,10,000): Market loss post-Jio led to the collapse, with Anil Ambani facing trial.
- Alok Industries ($4.1B/Rs. 3,56,93,30,85,000): Overexpansion led to the Reliance takeover.
- Jet Airways ($2B/Rs. 1,74,11,37,00,000): High fuel costs and market competition led to its collapse.
- PMC Bank Crisis ($1.77B/Rs. 1,54,09,06,24,500): HDIL’s misuse of funds resulted in failure.
- PNB Fraud ($1.4B/Rs. 121,844,976,680.00): A fraudulent letter of undertaking issued at the Fort branch of PNB.
- Yes Bank Crisis ($230M/Rs. 25,94,16,77,000): Risky lending practices led to the collapse.
- IL&FS (₹6,524 crore): Liquidity issues due to poor management.
Additionally, Amtek Auto, ABG Shipyard, and Jaypee Infratech also filed for bankruptcy, with significant debts. Despite these collapses, the government often shielded staff while ignoring protests from savers, leaving many victims uncompensated due to delayed and ineffective resolutions.
Cooperative Bank Failures
Since 2014, over 60 cooperative banks have closed under the NDA government. Many of these failures were due to mismanagement, poor governance, fraud, and liquidity crises. Notably, the PMC Bank crisis and ₹1.52 lakh crore fraud continue to highlight the severity of mismanagement in the sector. In 2022 alone, 12 cooperative banks shut down. The RBI imposed penalties, but the lack of robust oversight and political interference worsened the crisis, leaving depositors vulnerable.
SOURCE: What ails cooperative banks? Over 60 banks closed during NDA govt rule since 2014 VIEW HERE ⤡ (As reported on 15th February, 2025 ©ET BFSI)
The Growing Write-Offs of Corporate Loans
Between 2014 and 2024, Indian commercial banks wrote off ₹12.3 lakh crore in loans, a sum comparable to India’s annual defense budget. Public sector banks (PSBs) were the largest contributors, accounting for ₹6.5 lakh crore of these write-offs, while the State Bank of India led with ₹2 lakh crore. In FY24, ₹42,000 crore were written off, raising concerns about the accountability of bankers, especially in light of rising bank frauds.
SOURCES:
Banks Write Off Rs 12.3Lakh Crore in Loans, Equal to India’s Defence Budget; No Accountability for Bankers?? VIEW HERE ⤡ (As reported on 17th December, 2024 ©The 420)
The Surge in Bank Frauds
The RBI reported a staggering rise in bank frauds. Between April and September 2023, 18,461 cases involving ₹21,367 crore were reported, marking an 8-fold increase in financial losses compared to the previous year. Most of these frauds were cyber-related, with private sector banks reporting the highest number of cases. Despite these alarming figures, accountability remains scarce.
Rising Bankruptcy Cases and Recovery Rates
In 2022 Q3 alone, bankruptcy cases increased by 25%, with recovery rates plummeting to 23.45%. This resulted in significant “haircuts” for creditors (69.6%!), meaning they had to accept steep losses in the resolution process under the ill-conceived, amended IBC (2016). While insolvency filings are rising, the recovery rate remains dismal, reflecting systemic inefficiencies under the Insolvency and Bankruptcy Code (IBC) itself. The growing trend of defaults suggests deeper issues in corporate debt (re-)structuring in India.
Bankruptcy cases rise 25 per cent in Q3; recovery lowest at 23.45 per cent: Care Ratings VIEW HERE ⤡ (As reported on 20th February, 2023 ©The Economic Times)
Furthermore, this is not the entirety of the issue. There are additional aspects to this matter that have caused sleepless nights for millions of public depositors, particularly the everyday Indian citizens. The problem of NPAs (non-performing assets), coupled with widespread bankruptcies and the write-off of corporate loans, yields other associated issues, problem-zones, crisis-areas for the Indian political economy.
The Crisis Deepens: Wilful Defaulters
As of March 2024, the Reserve Bank of India (RBI) reported that 2,664 corporates have been classified as wilful defaulters, collectively owing ₹1.96 lakh crore to scheduled commercial banks.
A wilful defaulter is defined by the RBI as an entity that has the capacity to repay loans but deliberately avoids doing so, or diverts loan funds for purposes other than those for which they were sanctioned.
The top 10 corporate superrich wilful defaulters (as of latest reports) and their outstanding amounts are:
- Gitanjali Gems Ltd: ₹8,516 crore
- ABG Shipyard Ltd: ₹4,684 crore
- Concast Steel & Power: ₹3,557 crore
- Era Infra Engineering: ₹3,507 crore
- SEL Manufacturing Company Ltd: ₹3,367 crore
- Winsome Diamonds & Jewellery: ₹3,356 crore
- Transstroy (India): ₹3,261 crore
- Rotomac Global: ₹2,894 crore
- Zoom Developers: ₹2,217 crore
- Unity Infraprojects: ₹1,987 crore
Notably, Gitanjali Gems Ltd, promoted by Mehul Choksi, tops the list with an outstanding amount of ₹8,516 crore. Choksi fled India after being implicated in the ₹14,000-crore Punjab National Bank (PNB) fraud.
The number of wilful defaulters has consistently increased over the past four years, rising from 2,154 in March 2020 to 2,664 by March 2024. The total amount of unpaid dues has grown significantly from ₹1.52 lakh crore to ₹1.96 lakh crore in the same timeframe.
RBI reveals top 100 wilful defaulters; 2,664 corporates owe Rs 1.96 lakh crore VIEW HERE ⤡ (As reported on 23rd December, 2024 ©The Indian Express)
See More Information in the following:
https://onceinabluemoon2021.in/2024/12/30/the-great-indian-heist-exposing-the-crony-bloodsuckers/
The Correlation Between Political Power and Financial Crisis
Despite the immense losses suffered by the public, the ruling party, BJP, seems to thrive financially. In FY 2022-23, the BJP reported an income of ₹2360.844 crore, a stark contrast to the growing financial distress experienced by the masses.
BJP the richest political party with an income of Rs 2360.844 cr during FY 2022-23 VIEW HERE ⤡ (As reported on 1st March, 2024 ©APN News)
Quite recently, IndusInd Bank faces a major crisis that could pave the way to its anticipated bankruptcy, just like DHFL perhaps!
IndusInd Bank Crisis: Another DHFL?
IndusInd Bank uncovered Rs 1,600 crore in discrepancies tied to internal currency derivative trades over 7–8 years. Mismatched financial reporting due to internal swap valuations led to the losses. A 2023 RBI guideline prompted the review, revealing the issue. Corrective actions include unwinding internal trades, an independent audit, and notifying the RBI. CEO Sumant Kathpalia’s one-year extension signals governance concerns. Leadership instability and increased regulatory scrutiny now challenge the bank’s recovery.
SOURCE: IndusInd Bank’s crisis: What went wrong and the road ahead VIEW HERE ⤡ (As reported on 12th March, 2025 ©The Economic Times)
What is the way out of this extremely worrying scenario?
What are the consequences of the same?
India’s Bleak Financial Scenario (2025)
We find ourselves in the midst of an unprecedented economic recession as the Indian Stock Market experiences a significant downturn. Foreign investors are increasingly hesitant to invest in India, fueled by fears of a U.S. recession, ongoing supply chain disruptions, and tariff threats from President Trump. Consequently, the outflow of foreign investments has intensified market volatility. Additionally, the weakness of the U.S. economy has adversely affected Indian IT companies that depend on American revenue. Although we observe the SENSEX and NIFTY appearing to “shine” as of GMT 07:28 hrs, this phenomenon seems nothing more than a fleeting “bubble,” as the market is entirely simulated (a la Baudrillard) and chaos_ophical (a la Guattari), characterized by an irrational yet rational behaviour. However, at GMT 7:33 hrs, both the NIFTY and SENSEX have erased their initial gains, plunging yet again into the red bearish territory. What is occurring here? What drives this oscillation between bulls and bears? Who, in an indeterminate manner, influences these market dynamics?
Here is a brief summary of the past 10 days’ movements in the Indian Stock Market:
March 3: Sensex dropped 400+ points, Nifty down 15% from highs due to foreign selling and global uncertainty.
March 11: Nifty fell 0.3%, Sensex down 0.36% after U.S. recession fears; IndusInd Bank plunged 20% over accounting issues.
March 12: Nifty down 0.27%, Sensex down 0.22%; IT stocks fell 3.1%, Infosys dropped 3.5% after Morgan Stanley downgrade.
March 13: Nifty up 0.28%, Sensex up 0.31%; inflation data boosted hopes for rate cuts despite global trade tensions. However, for how long could these irregular “bubble” trends persist, after all?
Hyper-inflation in the market is inevitably observed, given such conditions. These global trade tensions, rising fuel prices, and a weakening rupee are pushing up costs for essential goods and services. Food supply issues due to climate change and erratic weather patterns further strain prices, while large corporations passing on higher costs to consumers sustains inflationary pressure. However, if the RBI manages to cut rates, stabilize the rupee, and improve supply chains, inflation could be controlled. Will the RBI manage to do that? It hardly seems to be the case, given the crony capitalist underpinning that is running the Indian political economy as of now!
SOURCES:
Indian benchmarks muted as IndusInd Bank, IT offset gains in other stocks VIEW HERE ⤡ (As reported on 11th March, 2025 ©Reuters)
Indian benchmarks end lower; IT index confirms bear market VIEW HERE ⤡ (As reported on 12th March, 2025 ©Reuters)
Indian shares rise as softer inflation counters trade woes VIEW HERE ⤡ (As reported on 13th March, 2025 ©Reuters)
It is undeniable that the scenario described above would not have emerged without the BJP, which secured only 37.36% of the votes in the last Lok Sabha Elections (there are huge allegations against the BJP for tampering, manipulating votes in its favour), and its insatiable greed (lobha ripu), which incited these issues from the outset. This situation reflects a shocking example of poor and failed governance.
It seems our so-called “Hindutvavadi” BJP Government does not know its own scriptures. It has been said in Kautilya’s Arthasastra (8.3.4-7)⤡:
“…greedy and lustful kings have perished by disease, poverty or enemy action.”
Conclusion: A Grim Future for Ordinary Citizens?
What could the common people do here? Consider collective suicides? No, that’s not the answer. The glimmer of hope may be faint, but it is not absent. Much like the Occupy Wall Street Movement in the USA, we need to initiate an “Occupy Dalal Street” movement—or better yet, “SEIZE DALAL STREET”—in India. This movement could hold crony corporate looters accountable for their transgressions to the broader Indian populace.
In conclusion, we must reaffirm the socialist principles embedded in the Indian Constitution, which advocate against the concentration of wealth in the hands of a select few!
SEE ALSO:
https://onceinabluemoon2021.in/2023/03/09/do-we-need-a-robin-hood-to-enrich-the-indian-have-nots/
ব্যা ব্যা ব্যাঙ্কশিপ (On Banking System) VIEW HERE ⤡
অর্থ-নী-নেতি (The Negation of Economics) VIEW HERE ⤡
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