Business
The ‘Dirty Dozen’ behind India’s bad loan crisis
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.
An International Monetary Fund (IMF) team led by Evan Papageorgiou visited Colombo from April 3 to 11, 2025. After constructive discussions in Colombo, Mr. Papageorgiou issued the following statement:
“Sri Lanka’s ambitious reform agenda supported by the IMF Extended Fund Facility (EFF) continues to deliver commendable outcomes. The post-crisis growth rebound of 5 percent in 2024 is impressive. Inflation declined considerably in recent quarters and has fallen to ‑2.6 percent at end-March 2025. Gross official reserves increased to US$6.5 billion at end-March 2025 with sizeable foreign exchange purchases by the central bank. Substantial fiscal reforms have strengthened public finances.
“The recent external shock and evolving developments are creating uncertainty for the Sri Lankan economy, which is still recovering from its own economic crisis. More time is needed to assess the impact of the global shock and how its implications for Sri Lanka can be addressed within the contours of its IMF-supported program.
“The government’s sustained commitment to program objectives is ensuring policy continuity and program implementation remains strong. Going forward, sustaining the reform momentum is critical to safeguard the hard-won gains of the program and put the economy on a path toward lasting macroeconomic stability and higher inclusive growth.
“Against increased global uncertainty, sustained revenue mobilization efforts and prudent budget execution in line with Budget 2025 are critical to preserve the limited fiscal space. Boosting tax compliance, including by reinstating an efficient and timely VAT refund mechanism, will help contribute to revenue gains without resorting to additional tax policy measures. Avoiding new tax exemptions will help reduce fiscal revenue leakages, corruption risks and build much needed fiscal buffers, including for social spending to support Sri Lanka’s most vulnerable. Restoring cost recovery in electricity pricing will help minimize fiscal risks arising from the electricity state-owned enterprise.
“The government has an important responsibility to protect the poor and vulnerable at this uncertain time. It is important to redouble efforts to improve targeting, adequacy, and coverage of social safety nets. Fiscal support needs to be well-targeted, time-bound, and within the existing budget envelope.
“While inflation remains low, continued monitoring is warranted to ensure sustained price stability and support macroeconomic stability. Against ongoing global uncertainty, it remains important to continue rebuilding external buffers through reserves accumulation.
“Discussions are ongoing, and the authorities are encouraged to continue to make progress on restoring cost-recovery electricity pricing, strengthening the tax exemptions framework, and other important structural reforms.
“The IMF team held meetings with His Excellency President and Finance Minister Anura Kumara Dissanayake, Honorable Prime Minister Dr. Harini Amarasuriya ; Honorable Labor Minister and Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, Honorable Deputy Minister of Finance and Planning Dr. Harshana Suriyapperuma, Central Bank of Sri Lanka Governor Dr. P. Nandalal Weerasinghe, Secretary to the Treasury Mr. K M Mahinda Siriwardana, Senior Economic Advisor to the President Duminda Hulangamuwa, and other senior government and CBSL officials. The team also met with parliamentarians, representatives from the private sector, civil society organizations, and development partners.
“We would like to thank the authorities for the excellent collaboration during the mission. Discussions are continuing with the goal of reaching staff-level agreement in the near term to pave the way for the timely completion of the fourth review. We reaffirm our commitment to support Sri Lanka at this uncertain time.”
The Commercial Bank of Ceylon has transformed its iconic ‘Foreign Branch’ into the ‘Corporate Branch,’ reaffirming its commitment to delivering dedicated, comprehensive financial solutions to corporate and trade customers.
The Bank said this transformation represents a new milestone in its illustrious journey, and resonates with the rich commercial heritage of Colombo, a city that has long served as a vital trading hub in the region.
Strategically located at the Bank’s Head Office at Commercial House, 21, Sir Razeek Fareed Mawatha (Bristol Street), Colombo 1, this rebranded Corporate Branch stands as a first of its kind in Sri Lanka —a premier financial hub tailored exclusively to the needs of corporate customers, the Bank said. The transformation aligns with the Bank’s vision of providing unparalleled service excellence, bespoke financial solutions, and fostering long-term business partnerships.
Commenting on this strategic initiative, Commercial Bank’s Managing Director/CEO Sanath Manatunge stated: “It is our aspiration that just as the historic Delft Gateway, at which our Head Office is located, once opened the path to the Dutch Fort, our Corporate Branch will chart a new era of enduring and prosperous business collaborations, that will extend beyond Sri Lanka’s shores.”
Fits Retail has partnered with retail giant Abans PLC to showcase the iconic DeLonghi coffee machines at two of Colombo’s most prestigious locations: Abans Elite Colombo 3 and Abans Havelock City Mall showrooms.
At these dedicated demonstration zones, visitors can discover the unparalleled precision engineering and user-friendly technology that have made DeLonghi machines the preferred choice for discerning coffee lovers in more than 46 countries worldwide. Renowned for consistently delivering café-quality espresso, cappuccino, and even specialty cold brews, DeLonghi machines exemplify Italian innovation at its finest.
Yasas Kodituwakku, CEO of Fits Retail, expressed excitement about the collaboration: “This partnership represents our unwavering commitment to bringing global coffee excellence to Sri Lankan connoisseurs. With Abans PLC, we’re creating more than just demonstration spaces; we’re curating premium destinations for an authentic coffee experience.”
“As pioneers of premium lifestyle experiences in Sri Lanka, our collaboration with Fits Retail aligns seamlessly with our vision of elevating everyday moments into exceptional experiences,” said Tanaz Pestonjee, Director Business Development at Abans PLC.
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