India’s Bad Loan Crisis: Lessons from The Dirty Dozen

5 April 20251 min read

Why in the news

A review of a book on the largest loan defaulters revived debate on how reckless infrastructure lending damaged banks.

Book: The Dirty Dozen by N. Sundaresha Subramanian, on the 12 largest unpaid loans.
Named defaulters: Ruias (Essar Steel), Gaurs (Jaypee Infratech), Mittals (ABG Shipyard).
It gained fresh attention after a borrower failed to block its release in a Kolkata (Alipore) court.
A bad loan (NPL) is unpaid principal or interest, typically for 90 days or more.

After the 2008 global financial crisis, stimulus met infrastructure gaps and low manufacturing capacity, producing inflation.
The government then promoted infrastructure through Public-Private Partnerships (PPPs).

Area	Problem
Partners	Inexperienced firms won large projects
SPVs	Little private risk; non-recourse clauses weakened discipline
Funds	Gold-plated costs; money diverted to unrelated entities or politics
Banks	No project finance skills; no corporate bond market, so maturity mismatch

Strong investigative reporting, but little history since the 1980s (BIFR era) and no discussion of regulatory pushback such as Urjit Patel’s Overdraft.
Credit system stays vulnerable: faster write-offs, regulatory dilution; Nirav Modi and Vijay Mallya cited.

Test yourself

1. Who wrote The Dirty Dozen: India's Twelve Biggest Corporate Defaulters?

The book is by N. Sundaresha Subramanian.

2. A bad loan or NPL is typically one unpaid for how long?

The notes state non-payment typically for 90 days or more.

3. Which problem arose because India lacked a corporate bond market, per the book review?

Short-term deposits funded long-term projects, causing maturity mismatch.