Why Indian Banks Treat Billionaires Like Royalty and You Like a Debtor

 By Chuppala Nagesh Bhushan

The 99% Discount: Why Indian Banks Treat Billionaires Like Royalty and You Like a Debtor

Two Indias, One Ledger

Every schoolchild learns Abraham Lincoln's definition of democracy: "of the people, by the people, for the people." In India's financial system, that definition has quietly been rewritten: of the rich, by the rich, for the rich — where the size of your wallet decides which set of rules applies to you.

Miss two EMIs on a car or home loan, and the state's machinery turns predatory. Recovery agents show up at your door, your phone fills with threats, your relatives are shamed, and in the worst cases — as with farmers whose tractors have been seized, sometimes with fatal consequences — the enforcement turns violent. The system knows exactly how to extract the last rupee from an ordinary borrower.

Default on thousands of crores as a billionaire, and the same system rolls out a red carpet. Seizure gives way to a "haircut" — the industry's polite word for writing off almost the entire debt.

The 0.03% Settlement

The scale of this double standard was laid bare by a recent National Company Law Tribunal (NCLT) case involving Subhash Chandra and the Essel Group. Chandra faced personal-guarantee claims of roughly ₹22,000 crore. The settlement plan initially approved required him to pay just ₹6.5 crore — ₹6.25 crore in settlement plus ₹25 lakh in "process costs."

Genuine institutional creditors fared little better:

Creditor	Claim	Settlement offered
LIC Housing Finance	₹1,322 crore	₹38 lakh
HDFC Bank	₹700 crore	₹20 lakh

Do the math and a ₹22,000 crore debt was settled for roughly 0.03% of its value — the equivalent of borrowing ₹100 and being asked to repay 3 paise. Even Vijay Mallya, watching from exile, was moved to point out the irony on social media: the system had chased him for ₹14,000 crore against a ₹6,000 crore debt, while Chandra was being let off almost entirely.

An Inside Job, By Design

How does a plan this lopsided clear approval? The Insolvency and Bankruptcy Code (IBC) requires only 75% of the Committee of Creditors to sign off. In the Chandra case, genuine lenders — LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank — held just 18–19% of the vote and opposed the plan outright.

The remaining 61.78% sat with five entities: World Crest Advisors, Laminate Capital Advisors, Coppeal Capital Advisors, Veena Investments, and Direct Media Distribution Ventures — not independent lenders, but entities woven into the Chandra family's own ecosystem. Veena Investments, for instance, is owned by Sushila Devi, wife of a Chandra relative. The debtor, in effect, sat in judgment of his own case.

Compounding the absurdity: the Resolution Professional accepted Chandra's claim of financial hardship without ordering a forensic audit, despite Canara Bank's demands for one — even as Chandra had just sold a Lutyens Delhi bungalow for ₹1,260 crore.

Reverse Justice, By the Numbers

This is not an isolated case; it's a pattern, and the data confirms it. Central Bank of India and Bank of Baroda figures show:

• Small borrowers (loans under ₹1 crore): banks recover 74% of defaults.
• Large corporate borrowers (loans over ₹100 crore): recovery collapses to 14.5%.

The Ambani group case is a case study in itself: 53 creditors, ₹49,000 crore in claims, settled for ₹455 crore — a recovery of 92 paise on every ₹100 owed. Central Bank of India and Bank of Baroda alone wrote off over ₹26,000 crore and ₹35,000 crore respectively for large defaulters — names that stay shielded behind "confidentiality" and financial jargon.

The "Swiss Bank" is Now a Domestic Product

India calls itself the Mother of Democracy; for corporate defaulters, it has become something closer to a sanctuary. Compare the consequences elsewhere:

• China: Evergrande's Hui Ka Yan received a life sentence, had his personal assets seized, and his company was fined over $1.3 billion.
• Iceland: after the 2008 crash, the country's top bankers went to prison.
• United States: Bernie Madoff was sentenced to 150 years.

In India, "exemplary punishment" is said to be incompatible with democracy — even as ordinary citizens are asked for PAN, Aadhaar, and effectively their family history to get a loan, while the Wadhawan brothers and Venugopal Dhoot have spent years out on bail with trials yet to properly begin.

Subsidising the Elite, One Minimum Balance at a Time

The irony deepens when you look at how banks balance their books. A system that says it cannot recover ₹10 lakh crore lost to the IBC process over the past decade has no trouble finding money elsewhere: in the last five years, Indian banks collected over ₹28,000 crore in penalties from customers who failed to maintain a minimum balance. The poor, in effect, are being fined for their poverty to help absorb the cost of the elite's haircuts.

No Bailouts for the Middle Class

The uncomfortable advice for ordinary borrowers is this: you are on your own. There is no restructuring meeting for your home loan, no 99% haircut if the earning member of your family dies, no bailout package waiting in reserve. What you can do instead:

• Get term insurance. For ₹400–500 a month, you can secure coverage worth crores — the closest thing to a personal bailout plan available to a salaried household.
• Protect your own credit. The same system that will hound you over a damaged CIBIL score will let a billionaire open a new venture abroad without consequence. Self-insurance isn't optional; it's the only safety net you're going to get.

A Question for the Mother of Democracy

The inequality built into India's financial system is no longer a secret — it operates in plain sight as what might fairly be called a freedom to loot. A man who owes ₹22,000 crore can talk about his next startup in Switzerland while a family loses everything over a few missed EMIs.

Every "99% haircut" deserves the same follow-up question: where did the money actually go? And if India is the Mother of Democracy, why has it also become a sanctuary for corporate default?

How much longer will the freedom to loot, enjoyed by the few, be financed by the endless grind of everyone else?