Media baron and Essel Group Chairman Dr. Subhash Chandra has issued a detailed clarification regarding his personal insolvency proceedings, aiming to dispel what he termed a “wrong perception and understanding” surrounding the widely reported ₹22,000 crore figure.
In a statement released on August 30, Chandra addressed widespread social media discussions, including posts using the hashtag #PaiseVapasKaro, which he said had created confusion about the nature of the liabilities. He emphasized a crucial distinction between personal borrowing and personal guarantees.
Clarifying Personal Borrowing vs. Guarantees
Chandra explicitly stated that he has not personally borrowed ₹22,000 crore from banks and financial institutions. He clarified that while the total personal guarantees he signed amounted to approximately ₹22,000 crore, only about ₹4,800 crore of these guarantees were in place when the underlying borrowers initially obtained funds. The remaining guarantees, he noted, were signed following defaults.
“My borrowing is ₹0,” Chandra asserted, highlighting that a personal guarantee makes a guarantor potentially liable upon a borrower's default, but it does not imply the guarantor personally received or borrowed the entire guaranteed sum.
Outstanding Liabilities and Reconciliation
Chandra's statement included a lender-wise table detailing claims arising from these personal guarantees. According to this table, the borrowing entities received a total of ₹4,808 crore at the time of borrowing. Against this, borrowers had already repaid ₹3,803 crore, leaving an outstanding balance of around ₹998 crore.
However, claims filed by lenders in the personal insolvency proceedings were substantially higher, totaling ₹5,311 crore. Chandra's reconciliation indicates that ₹1,049 crore of these claims have since been settled or paid, resulting in a remaining balance of ₹4,262 crore.
Lenders involved include India Bulls Housing Finance, Axis Bank Group, HDFC Group, Canara Bank, Edelweiss, Franklin Templeton, IndusInd Bank, LIC Housing Finance, RBL Bank, and Union Bank. The figures varied from an earlier press statement because some accounts, which had neither voted for nor against the resolution plan, were not initially considered.
Multiple Entities and Asset Declaration
One key reason for the discrepancy between original borrowing and aggregate claims is that multiple companies and entities were involved as borrowers. A single lender might have extended funds to several entities, all guaranteed by Chandra, leading to higher aggregated claims in personal insolvency proceedings.
The Resolution Professional appointed by the NCLT examined Chandra's assets during the preparation of the repayment plan. Chandra's asset declaration in Parliament in 2016 stood at ₹39.08 crore, which subsequently reduced to ₹31.79 crore. This included a residential property valued at ₹25 crore that was also mortgaged, leaving liquid assets of approximately ₹6.79 crore.
Borrowers Assure Settlement; Call for Independent Audit
Chandra stated that he has discussed the matter with the borrowers, who have assured him they would settle the ₹4,262 crore outstanding amount after reconciliation with lenders. He also mentioned significant borrowing from other sources, including foreign and domestic funds, NBFCs, and corporates, with most of these liabilities either settled or in the process of settlement, or backed by adequate assets.
Reiterating his call for an independent examination, Chandra appealed to the banking system, the Finance Ministry, and senior banking officials to appoint an independent auditor. The audit's purpose would be to establish the actual amount the group borrowed when it first defaulted and how much has been repaid since then, aiming to clarify the true financial situation.