Business

The ‘Dirty Dozen’ behind India’s bad loan crisis

Published

1 year ago

2024/09/10

Sahan Weerasooriya

Subramaniam and his family

By Ifham Nizam

The Reserve Bank of India (RBI) in 2017 shocked the nation by disclosing a list of the country’s 12 largest defaulters, who were responsible for nearly a quarter of all bad loans in the Indian banking system.

This alarming discovery of the “Dirty Dozen” exposed the murky landscape of corporate irresponsibility and regulatory neglect, revealing the harsh reality of gross economic disparity, complacent governance and coordinated deceit.

For the first time, these defaulters risked losing control of the companies they had built. The Insolvency and Bankruptcy Code (IBC), the most significant reform in the financial sector under the Narendra Modi government, ensured the protection of these assets’ economic value, even as promoters were removed and replaced by stronger players with the vision and means to turn around these companies.

In ‘The Dirty Dozen’, business journalist N. Sundaresha Subramanian investigates the causes and impacts of India’s chronic bad loan crisis. By documenting in his book the economic misadventures of Vijay Mallya, Nirav Modi, and Manoj Gaur among others, Subramanian uncovers the intricate web of financial chaos, political plundering and malpractice plaguing the country’s corporate landscape.

Through his work, Subramanian offers a revealing diagnosis of India’s financial health since liberalization. In a country where millions struggle for basic sustenance, ‘The Dirty Dozen’ provides a brave, hard-hitting and much-needed exposé of crooked business moguls who orchestrated deeply damaging financial manoeuvres. Despite accumulating vast wealth, these individuals enjoy impunity, leaving India’s economy on the brink.

Currently the Executive Editor at Economic Times’ ET Prime, Subramanian began his journalism career with the launch of the Mumbai edition of Hindustan Times in the early 2000s. He has since worked at The Economic Times, DNA Money, Mint, and Business Standard.

Speaking exclusively to The Island Financial Review, Subramanian emphasized that democracy is a great strength for Sri Lanka and expressed hope that citizens would exercise their franchise wisely to elect a government capable of leading the nation towards economic strength and prosperity.

He remarked: “Sri Lanka is a beautiful country, which I had the privilege of visiting a few years ago. The sun-kissed beaches, the greenery of the highlands, and its rich cultural heritage make it a prime destination for global tourists. The new government should focus on further leveraging the tourism sector and developing trade and investments with friendly countries like India and the wider world.”

When asked about the effectiveness of the IBC, Subramanian described it as the most significant financial sector reform under the Modi government. For the first time, promoters faced the threat of losing control of their companies, which were often regarded as family properties passed down from one generation to the next. According to regulatory figures, over INR 3.4 lakh crore has been recovered by creditors, with more than 27,000 cases withdrawn due to the fear of losing companies, leading to settlements worth over INR 10 lakh crore. This, he noted, has contributed significantly to the improved health of India’s banking system.

Reflecting on his research, Subramanian shared that each of the twelve cases was unique. The troubled steel sector, accounting for five of the dozen, played a significant role in the narrative. The cyclical issues affecting steel demand, coupled with the cancellation of coal block allocations due to corruption allegations, were crucial to the story. Additionally, the different personalities behind each of these cases made them all the more intriguing, and Subramanian sought to bring out these complexities in the book.

Since its release, The Dirty Dozen has garnered significant attention and critical acclaim in major publications. Subramanian believes the book has greatly contributed to public understanding of the bad loan crisis and helped advance the discourse on the subject. Prior to its publication, there was no single source that compiled the details of these twelve critical cases. Various professional institutions, regulators, and students have shown interest in studying these cases, which could lead to a better approach if similar problems arise in the future.

Subramanian acknowledges that the introduction and effective implementation of the IBC over the past eight years has changed the equation between creditors and large debtors. With over 7,800 companies admitted to the resolution process, a significant amount of debt has been recovered, and over 1,000 companies have found new life. While the future remains uncertain, Subramanian hopes this new equation will result in a healthier financial system.

For those aspiring to cover complex financial issues, Subramanian advises practising reading financial statements and corporate disclosures. “It can often feel like searching for a needle in a haystack, but if you look hard enough, you will eventually find it,” he says. Since those involved are usually resourceful individuals, he stresses the importance of not only finding something to write about but also being able to defend it.

All News Advertisement

Business

SriLankan Airlines Update on Middle East Operations

Published

2 hours ago

2026/03/3

Rashi Nihara

03 March 2026; Colombo – As airspace in certain parts of the Middle East continues to remain closed due to the ongoing conflict, the following SriLankan Airlines flights scheduled to operate today have been cancelled:

Flight Route
UL 225 Colombo–Dubai
UL 226 Dubai–Colombo
UL 231 Colombo–Dubai
UL 232 Dubai–Colombo
UL 229 Colombo–Kuwait
UL 230 Kuwait–Colombo
UL 217 Colombo–Doha
UL 218 Doha–Colombo
UL 253 Colombo–Dammam
UL 254 Dammam–Colombo
UL 265 Colombo–Riyadh
UL 266 Riyadh–Colombo

We sincerely appreciate our passengers’ understanding and patience as these cancellations are implemented in the interest of their safety and wellbeing.

For more information, please contact: 1979 (within Sri Lanka); +94 11 777 1979 (international); WhatsApp +94 74 444 1979 (chat only); your travel agent; or visit www.srilankan.com

Business

Middle East escalation sends oil soaring; Sri Lanka faces price shock despite assurances on supply

Published

12 hours ago

2026/03/3

Thilina Walpola

Vessels have been forced to anchor as Iran threatens to close the Strait of Hormuz

Global oil prices surged sharply yesterday following coordinated US and Israel-backed strikes on Iran, and Tehran’s retaliatory attacks targeting US interests in the region, alongside escalating hostilities involving Hezbollah in Lebanon. The renewed instability in the Middle East – the artery of the world’s energy supply – has sent tremors through financial markets and triggered fresh anxiety in oil-importing nations such as Sri Lanka.

Brent crude climbed steeply in early Asian trading, with traders pricing in the risk of supply disruptions through critical maritime chokepoints, particularly the Strait of Hormuz, through which nearly a fifth of global oil passes. Market analysts say the spike reflects not only immediate supply fears but also the potential for prolonged geopolitical tension that could keep prices elevated for months.

Meanwhile, Asian equities reacted nervously to the unfolding crisis. Major indices across the region retreated as investors fled risk assets, concerned that higher energy costs could dampen growth and reignite inflationary pressures.

Asian oil and gas stocks – the only winner in Asian equity markets – rallied strongly, reflecting expectations of higher revenues amid rising crude prices. This divergence of falling broader markets alongside rising oil shares signals investor anticipation of higher inflation and weaker consumer demand in emerging markets like Sri Lanka.

Meanwhile, reports of increased Chinese crude purchases are further compounding market anxiety. If Beijing accelerates buying to secure strategic reserves in anticipation of supply constraints, global prices could climb even further because China’s procurement strategy has great influence on the world oil price.

“Should Chinese demand rise while Middle Eastern exports face disruption, the supply-demand imbalance could tighten considerably, amplifying volatility in global energy markets”, say global energy market analysts.

In Sri Lanka, long queues have begun forming at fuel stations amid fears of shortages and higher pump prices once new shipments arrive. The government has sought to calm public nerves, stating that sufficient stocks are available for approximately one month and that fresh supplies are being sourced from India and Singapore.

Deputy Minister of Tourism, Dr. Ruwan Ranasinghe said that as Sri Lanka imports refined products primarily from India and trading hubs such as Singapore, direct disruptions to Middle Eastern sea routes would not immediately interrupt supply chains. He maintained that there is no cause for panic buying.

In an unusual show of political maturity, Prasad Siriwardena, an Opposition MP from the Samagi Jana Balawegaya (SJB) urged the public to remain calm and refrain from hoarding, warning that artificial shortages could emerge if panic-driven stockpiling spreads.

However, former minister Wimal Weerawansa criticised the government for failing to build a strategic reserve of at least three months, arguing that Sri Lanka’s total dependence on imported fuel leaves it dangerously exposed to prolonged geopolitical shocks.

Weerawansa contended that the government failed to anticipate the likelihood of US-Iran tensions escalating into direct confrontation and should have proactively guided petroleum authorities to secure adequate reserves in advance.

Meanwhile, an independent analyst told this reporter on the condition of anonymity that the global economic spillover could have wide-ranging consequences on Sri Lanka, outlining five factors.

Energy costs that feed into transportation, manufacturing and food prices

Tighter monetary policy risks as the Central Bank may hesitate to cut rates if inflation resurges

Slower growth as consumers and businesses reduce spending when energy costs rise

A widening trade deficit as Sri Lanka would face increased import bills

Pressure on the Rupee as increased dollar outflows for fuel imports could strain foreign exchange reserves

In conclusion, he said, “One can only hope that diplomacy prevails before oil’s surge turns into a sustained economic storm for the global economy.”

by Sanath Nanayakkare

Business

How ‘distant wars can quickly arrive at the domestic pump’

Published

12 hours ago

2026/03/3

Thilina Walpola

Vehicles lining-up for petrol in Colombo as panic buying takes control.

The harsh economic realities behind soothing words

Sri Lanka’s fragile economic recovery faces a renewed external threat as escalating conflict involving Iran sends global oil prices sharply higher, raising concerns over inflation, foreign reserves and fiscal stability.

While authorities insist there is no immediate fuel shortage, economists warn that prolonged instability in the Middle East could trigger a familiar and painful chain reaction in an import-dependent economy still recovering from its worst financial crisis in decades.

The state-run Ceylon Petroleum Corporation (CPC) confirmed that the country currently holds sufficient petrol and diesel stocks for more than a month.

Energy Minister Eng. Kumara Jayakody assured that scheduled shipments remain unaffected and urged the public to refrain from panic buying, warning that artificial demand could disrupt smooth distribution.

But behind those reassurances lies a harsher economic reality: Sri Lanka does not need a physical fuel shortage to suffer — a sustained spike in global crude prices alone could be enough.

Market jitters intensified amid fears that any escalation could threaten shipping through the Strait of Hormuz, the narrow maritime corridor through which a significant share of the world’s oil supply passes daily. Even speculation of disruption has historically been sufficient to push prices sharply upward.

Sri Lanka sources refined fuel from multiple markets, including India and Southeast Asia. However, global benchmark prices ultimately determine import costs. If crude prices remain elevated, the country’s monthly fuel import bill could surge — placing fresh strain on dollar reserves.

Higher oil prices would ripple across the entire economy. Transport, electricity generation, manufacturing, agriculture and food distribution are all energy-sensitive sectors. A sustained price increase could reverse recent gains in inflation control.

The Central Bank of Sri Lanka has worked to stabilise inflation and the rupee through tight monetary discipline. Analysts caution that a renewed oil shock could complicate this effort, widening the trade deficit and pressuring the exchange rate.

“Sri Lanka is structurally vulnerable to energy price shocks. Even without direct supply disruption, higher global prices immediately translate into macroeconomic stress, a senior economic analyst said.

The government is currently operating under strict fiscal consolidation targets as part of its recovery programme. A rising fuel bill could expand subsidy pressures or force politically sensitive fuel price adjustments.

Any increase in administered fuel prices would inevitably feed into cost-of-living pressures, testing public tolerance amid ongoing austerity.

Beyond oil markets, instability in the Middle East carries another risk: remittances. The Gulf region remains a key source of foreign employment for Sri Lankans and a crucial inflow of foreign exchange.

Any economic slowdown or labour disruption in the region could dampen remittance flows, reducing one of the country’s most stable dollar lifelines.

An energy expert said for Sri Lanka, the Iran conflict is not merely a distant geopolitical event. It is a potential economic stress test at a moment when stability remains hard-won.

“Whether this turns into a temporary price spike or a prolonged oil shock will determine how severely it tests the country’s recovery trajectory. For now, policymakers are watching global markets closely — aware that in today’s interconnected economy, distant wars can quickly arrive at the domestic pump.”

By Ifham Nizam