Under the guise of the Insolvency and Bankruptcy Code (IBC), a massive financial loot is underway surrendering public wealth and the hard-earned savings of ordinary citizens to large corporations. The unbelievable settlement that financial institutions were prepared to grant Subhash Chandra, founder of the Essel/Zee Group and former Rajya Sabha MP, lays bare the true face of this daylight robbery.

SUBHASH CHANDRA’S NEAR-TOTAL HAIRCUT

Subhash Chandra owed Rs 22,006.57 crore to various financial institutions. Under the IBC resolution terms, the recovery amount agreed upon was a mere Rs 6.25 crore, plus Rs 25 lakh toward other expenses. This meant lenders accepted just 0.028% of total outstanding claims, waiving nearly Rs 22,000 crore, a staggering 99.97 per cent haircut.

Only two public sector banks, Canara Bank and Union Bank of India, are involved in this settlement; the remaining lenders are private banks and non-banking financial institutions. Canara Bank stood to receive just Rs 10 lakh against its admitted dues of Rs 352.10 crore (a loss of Rs 352 crore). Union Bank was set to recover only Rs 4.75 lakh against Rs 167.25 crore (a loss of Rs 167.20 crore). Although a five-member special bench of the NCLT has currently granted an interim stay on the petitions filed by banks and other financial institutions, this exposes a system that lends legal validity to such dubious settlements.

BEYOND WRITE-OFFS: OVER RS 10 LAKH CRORE LOST TO HAIRCUTS

Between 2015–16 and 2025–26, commercial banks officially wrote off Rs 18,76,593 crore, as reported to Parliament. Corporate haircuts under the IBC are over and above this figure. Haircut losses under the IBC are not counted as official loan write-offs by the Reserve Bank of India or the Ministry of Finance. Official disclosures often highlight nominal amounts recovered rather than the scale of the foregone claims. Since the inception of the IBC in 2016, across 1,419 resolved cases involving roughly Rs 14.14 lakh crore in admitted claims, banks recovered only around Rs 4 lakh crore. The remaining balance—exceeding Rs 10 lakh crore—was surrendered as haircuts to corporate defaulters.

MAJOR CORPORATE HAIRCUTS: AN OVERVIEW

Key resolution cases under the IBC illustrate the scale of value lost:

When Videocon was transferred to the Vedanta Group in June 2021, public sector banks absorbed steep losses:

·         State Bank of India: Recovered Rs 545 crore against dues of Rs 11,151 crore (Loss: Rs 10,606 crore).

·         Union Bank of India: Recovered Rs 274 crore against dues of Rs 5,600 crore (Loss: Rs 5,326 crore).

·         Central Bank of India: Recovered Rs 255 crore against dues of Rs 5,207 crore (Loss: Rs 4,952 crore).

·         Bank of Baroda: Recovered Rs 209 crore against dues of Rs 4,281 crore (Loss: Rs 4,072 crore).

·         Canara Bank: Recovered Rs 180 crore against dues of Rs 3,674 crore (Loss: Rs 3,494 crore).

Despite numerous massive haircuts occurring including this one, no bank had voiced complaints or grievances back then, nor were there any major media headlines. Therefore, one cannot help but suspect that the recent pushback by certain financial institutions against the haircut granted to Subhash Chandra, along with the NCLT granting a stay, is merely an attempt to divert attention from certain debates and whitewash the image of select individuals and regulations.

CORPORATE CONSOLIDATION VIA HAIRCUTS

This framework enables dominant business houses to acquire assets at nominal valuations. By clearing bad loans of 10 companies through IBC haircuts, where total outstanding claims stood at Rs 61,832 crore, the Adani Group (via entities like Adani Properties, Goodgames, Adani Power, and Adani Ports) took control of these assets for Rs 15,977 crore. While public lenders built on citizen deposits absorb losses, conglomerates expand their asset bases at discounted prices.

BANK EMPLOYEES’ RESISTANCE

Employee unions have served as a critical channel in exposing these systemic losses and challenging public sector bank privatization. This explains why the Department of Financial Services (DFS), backed fully by the Union Government, is now unilaterally breaching its signed agreements with the trade unions. Pushed to strike by these unilateral breaches of signed agreements, bank employees have called for walkouts on September 11, 28, 29, and 30, with an indefinite strike scheduled from October 26. These industrial actions reflect both workplace grievances and broader resistance to policies that compromise public banking assets.

THE NEED FOR PUBLIC SCRUTINY

A judicial stay in the Subhash Chandra case does not address the underlying structural flaws. Every resolution passed under the IBC since 2016 requires comprehensive public and independent investigation. Strict caps and increased transparency must be introduced to prevent haircuts from serving as state-assisted balance sheet clearance for corporate borrowers. Safeguarding the nation's public wealth demands collective public support for the working people defending it.