‘My borrowing is ₹0’: Subhash Chandra explains ₹22,000 crore personal guarantee controversy

Media baron and Essel Group Chairman Dr Subhash Chandra has issued a detailed clarification on his personal insolvency proceedings, seeking to counter what he called a “wrong perception and understanding” surrounding the case and the widely discussed ₹22,000-crore figure.

Chandra, in a statement dated August 30, said social-media posts over the past three days, including those carrying the hashtag #PaiseVapasKaro, had created confusion about the nature of the liabilities involved.

“I have seen & observed social media posts since past 3 days on the issue. Some of the posts also included hashtags like #PaiseVapasKaro. There has been a wrong perception & understanding about the matter. Hence, I am giving a detailed account of the entire matter,” he wrote in a post on X (formally twitter).

At the centre of the controversy is the distinction between personal borrowing and personal guarantees.

‘My borrowing is ₹0’  

According to Chandra's latest statement, he has not personally borrowed ₹22,000 crore from banks and financial institutions.

He said the total personal guarantees he had signed amounted to about ₹22,000 crore, but only around ₹4,800 crore of those guarantees were signed at the time the underlying borrowers obtained the funds. The remaining guarantees, he said, were signed after defaults occurred.

Chandra also stated that his own borrowing stood at ₹0.

The distinction is significant because a personal guarantee makes the guarantor potentially liable when the underlying borrower defaults, but it does not mean the guarantor personally received or borrowed the entire amount covered by the guarantee.

What the latest figures show  

Chandra's statement includes a lender-wise table covering claims arising from the personal guarantees.

The table shows that the borrowing entities had received a total of ₹4,808 crore at the time of borrowing. Against this, borrowers had already paid ₹3,803 crore, leaving an outstanding balance of around ₹998 crore, according to the statement.

However, claims filed by lenders in the personal insolvency proceedings were substantially higher, at ₹5,311 crore.

The statement says ₹1,049 crore of these claims have subsequently been settled or paid, leaving ₹4,262 crore as the balance according to the reconciliation presented by Chandra.

The figures cover claims involving lenders including India Bulls Housing Finance, Axis Bank Group, HDFC Group, Canara Bank, Edelweiss, Franklin Templeton, IndusInd Bank, LIC Housing Finance, RBL Bank and Union Bank.

Chandra said the figures differ from an earlier press statement that had put the amount at ₹3,992 crore because some accounts were not taken into consideration as they had neither voted for nor against the resolution plan.

Why claims are higher than the original borrowing  

One of the key issues highlighted by the statement is that the borrowing entities were multiple companies and entities. In some cases, a lender may have extended money to two, three or four entities whose repayment was guaranteed by Chandra.

This means the aggregate amount of claims in the personal insolvency proceedings cannot necessarily be equated with the amount of money personally borrowed by Chandra.

The statement says the Resolution Professional appointed by the NCLT examined Chandra's assets and available funds while preparing the repayment plan.

It also refers to Chandra's declaration of assets in Parliament in 2016, which stood at ₹39.08 crore. According to his statement, these assets were subsequently reduced to ₹31.79 crore, including a residential property valued at ₹25 crore that was also mortgaged, leaving liquid assets worth about ₹6.79 crore.

Chandra says borrowers will settle ₹4,262 crore  

Chandra said he had discussed the matter with the borrowers and that they had assured him they would settle the ₹4,262 crore outstanding after reconciliation with lenders.

He also said substantial borrowing existed from other sources, including foreign funds, domestic funds, NBFCs and corporates. According to him, most of these liabilities had either been settled by the borrowers or were in the process of being settled, while some had adequate assets backing them.

The statement effectively shifts the focus from the headline ₹22,000-crore guarantee figure to the actual outstanding liabilities and repayments associated with the borrowing entities.

Calls for an independent audit  

Chandra has also reiterated his call for an independent examination of the group's borrowing and repayment history. He appealed to the banking system, the Finance Ministry and senior banking officials to appoint an independent auditor to examine the group's financial records.

The purpose, he said, would be to establish how much the group had actually borrowed when it first defaulted and how much it had repaid since then.

“How much was the borrowing when the group first defaulted in the financial market and how much has it paid till now? The truth will become clear,” Chandra said.

He said he hoped lenders would also engage directly with borrowers, reconcile their accounts and recover the outstanding amounts.