'IBC is not a panacea': ISB professor asks why banks did not monitor Subhash Chandra's falling assets
IBC cannot compensate for poor screening, weak guarantees, or inadequate monitoring before default, says ISB professor Prasanna Tantri
- Aug 31, 2026,
- Updated Aug 31, 2026 3:00 PM IST
Prasanna Tantri, finance professor at the Indian School of Business, has questioned lenders' role in the Subhash Chandra insolvency case. In a tweet, he asked why banks relied on personal guarantees without adequately monitoring the guarantor's assets.
Tantri reacted on Monday to the National Company Law Tribunal's approval of a repayment plan under which Essel Group founder Subhash Chandra will pay Rs 6.5 crore against admitted creditor claims of about Rs 22,006.57 crore.
That translates into a haircut of nearly 99.97% for lenders.
Don't Miss: Subhash Chandra debt resolution: Lenders challenge NCLT approval for ₹6.5-crore plan in NCLAT
"One defence of the low recovery in the Essel Group case is that the exposure arose from a guarantee, not a direct loan. But that does not absolve the lenders," the professor said. "Why rely on the guarantee of a person without sufficient assets?"
He also questioned why banks did not monitor Chandra's assets if their value later declined. "If his assets subsequently eroded, why did the banks not monitor him and demand additional collateral when their value breached agreed thresholds?" he said.
Tantri also cautioned against treating the Insolvency and Bankruptcy Code (IBC) as a solution to problems that arise before a borrower defaults.
"The IBC is not a panacea," he said. "It can prevent disorderly resolution and reduce deadweight losses after default. It cannot compensate for poor screening, weak guarantees, or inadequate monitoring before default."
In Case You Missed It: ‘My borrowing is ₹0’: Subhash Chandra explains ₹22,000 crore personal guarantee controversy
Chandra Clarifies Liabilities
Chandra has separately rejected what he described as a wrong perception about his personal insolvency proceedings.
In a statement dated August 30, Chandra said there has been a wrong perception and understanding about the matter.
Chandra said he had not personally borrowed ₹22,000 crore from banks and financial institutions. He said he had signed personal guarantees totalling about ₹22,000 crore.
However, only around ₹4,800 crore of those guarantees were signed when the underlying borrowers obtained the funds, he said. The remaining guarantees were signed after defaults had occurred.
Chandra also said his own borrowing stood at ₹0.
His statement included a lender-wise table covering claims arising from the personal guarantees. It showed that borrowing entities had received a total of ₹4,808 crore when the loans were taken. The borrowers had already repaid ₹3,803 crore, leaving an outstanding balance of around ₹998 crore, according to his statement.
Creditors Challenge NCLT Order
The NCLT last Tuesday approved Chandra’s repayment plan under Section 114 of the IBC. NCLT Member (Judicial) Nilesh Sharma, ruling as a third member, rejected objections from lenders that the recovery was too low to merit approval.
Some creditors have since challenged the order before the National Company Law Appellate Tribunal.
Mint reported that NCLAT has agreed to hear an urgent challenge against the NCLT's decision.
Solicitor General Tushar Mehta, representing the creditors, sought an immediate hearing during a virtual mentioning of the matter. The appellate bench agreed to hear the case on Tuesday at 10:30 am.
HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India were among the financial institutions that voted against the repayment proposal.
Prasanna Tantri, finance professor at the Indian School of Business, has questioned lenders' role in the Subhash Chandra insolvency case. In a tweet, he asked why banks relied on personal guarantees without adequately monitoring the guarantor's assets.
Tantri reacted on Monday to the National Company Law Tribunal's approval of a repayment plan under which Essel Group founder Subhash Chandra will pay Rs 6.5 crore against admitted creditor claims of about Rs 22,006.57 crore.
That translates into a haircut of nearly 99.97% for lenders.
Don't Miss: Subhash Chandra debt resolution: Lenders challenge NCLT approval for ₹6.5-crore plan in NCLAT
"One defence of the low recovery in the Essel Group case is that the exposure arose from a guarantee, not a direct loan. But that does not absolve the lenders," the professor said. "Why rely on the guarantee of a person without sufficient assets?"
He also questioned why banks did not monitor Chandra's assets if their value later declined. "If his assets subsequently eroded, why did the banks not monitor him and demand additional collateral when their value breached agreed thresholds?" he said.
Tantri also cautioned against treating the Insolvency and Bankruptcy Code (IBC) as a solution to problems that arise before a borrower defaults.
"The IBC is not a panacea," he said. "It can prevent disorderly resolution and reduce deadweight losses after default. It cannot compensate for poor screening, weak guarantees, or inadequate monitoring before default."
In Case You Missed It: ‘My borrowing is ₹0’: Subhash Chandra explains ₹22,000 crore personal guarantee controversy
Chandra Clarifies Liabilities
Chandra has separately rejected what he described as a wrong perception about his personal insolvency proceedings.
In a statement dated August 30, Chandra said there has been a wrong perception and understanding about the matter.
Chandra said he had not personally borrowed ₹22,000 crore from banks and financial institutions. He said he had signed personal guarantees totalling about ₹22,000 crore.
However, only around ₹4,800 crore of those guarantees were signed when the underlying borrowers obtained the funds, he said. The remaining guarantees were signed after defaults had occurred.
Chandra also said his own borrowing stood at ₹0.
His statement included a lender-wise table covering claims arising from the personal guarantees. It showed that borrowing entities had received a total of ₹4,808 crore when the loans were taken. The borrowers had already repaid ₹3,803 crore, leaving an outstanding balance of around ₹998 crore, according to his statement.
Creditors Challenge NCLT Order
The NCLT last Tuesday approved Chandra’s repayment plan under Section 114 of the IBC. NCLT Member (Judicial) Nilesh Sharma, ruling as a third member, rejected objections from lenders that the recovery was too low to merit approval.
Some creditors have since challenged the order before the National Company Law Appellate Tribunal.
Mint reported that NCLAT has agreed to hear an urgent challenge against the NCLT's decision.
Solicitor General Tushar Mehta, representing the creditors, sought an immediate hearing during a virtual mentioning of the matter. The appellate bench agreed to hear the case on Tuesday at 10:30 am.
HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India were among the financial institutions that voted against the repayment proposal.