Last week brought a familiar Indian story dressed in a fresh set of numbers: an institution funded by the taxpayer treats its biggest defaulters with far more discretion than it shows an ordinary depositor who is late in updating know-your-customer (KYC) form.
This is not, as it turns out, a story about banks in crisis. In fact, the bad debt numbers, on paper, have improved to the point of a celebration. It is a story about who are asked to explain themselves when something goes wrong and who are allowed to simply move on.
BoB's Shenanigans
BoB is important, because it is a good indicator of what is wrong with selective optics. In response to a right to information (RTI) application by Pune-based activist Vivek Velankar seeking a full account of loans written off from FY20-21 through FY25-26, the Bank provided the following numbers: ₹35,715 crore technically written off, of which ₹7,817 crore was written off as ‘haircuts’ following bankruptcy proceedings, against a recovery of only ₹9,946 crore (under 28%). A ‘technical write-off’ is an accounting entry, not automatically a loss; recovery efforts are supposed to continue after it. But a 28% recovery rate only confirms that large defaulters continue to benefit from a system that has written off several lakh crore rupees on their behalf.
Importantly, BoB refused to identify a single big defaulter, invoking privacy concerns that are routinely ignored in recovery efforts against small borrowers. To be fair, PSBs have come a long way from FY22-23, when loan write-offs collectively peaked at ₹1.27 lakh crore. These have dropped 45% in FY25-26 to ₹70,528 crore, with a recovery rate of 46%, according to a government response in Parliament. It is also a fact that banks have not needed fresh capital infusion from the exchequer since FY22-23 and a column by Tamal Bandyopadhyay celebrated the fact that non-performing assets (NPAs) of every listed public and private bank are below 1%, for the first time on record.
Beyond of these happy numbers, there are persistent worries about what banks, including BoB, are hiding. For instance, on smaller loans, the Reserve Bank of India (RBI) found it necessary to issue circulars in 2024 and 2025 against: a) banks disguising stressed small loans by rolling them over at the end of tenure with only a small part payment; b) failing to tag top-up gold loans in their own systems as renewals of stressed debt, making them appear as fresh loans; and c) evergreening gold and microfinance books through ‘netting off’, or issuing fresh loans to quietly cover instalments a borrower was about to miss.
On big-ticket loans, the Securities and Exchange Board of India (SEBI) caught banks and large non-banking finance companies (NBFCs) brazenly using alternative investment funds (AIFs) to hide bad loans to the tune of ₹30,000 crore. The AIF would buy bonds or units of a stressed borrower, who would use the proceeds to repay the original loan on schedule, allowing the account to appear healthy. RBI followed up by barring regulated lenders from investing in any AIF with exposure to their own borrowers, after which the top-3 private banks and Piramal Enterprises made provisions for such loans. These are the same institutions being celebrated for low NPA numbers and a cleaned-up system!
Factor in the fact that credit growth is running six percentage points ahead of deposit growth and it is clear that we already have the ingredients for new tricks to hide bad news. This context matters for several BoB issues, some of which have been brushed under a carpet of ‘good news’ on bank performance.
US$600 Million Question and More
In July, BoB informed stock exchanges that it had agreed to pay US$600mn (million) (about ₹5,700 crore), roughly its entire net profit for the quarter, to settle a case tied to the 2020 collapse of NMC Health. BoB's Abu Dhabi branch was accused of failing anti-money-laundering and KYC checks going back to 2012, in claims worth a hefty US$5.4bn (billion). With a court ruling likely to go against it, the Bank chose to settle before judgement, capping its liability while denying any wrongdoing.
This may have met SEBI's disclosure rules, but it raises questions that remain unanswered. What does it say about the Bank's internal controls and about RBI's own inspections, that an issue this large stayed hidden for eight years?
By way of background, NMC Health was, until 2020, the largest private hospital operator in the UAE and a constituent of London's FTSE 100 index. It collapsed after Muddy Waters Research, a short-seller, alleged in December 2019 that the company's cash balances were inflated and its liabilities understated; subsequent investigation found more than US$4bn — by some accounts closer to US$6.6bn — in previously undisclosed debt.
Since BoB is a PSB, subject to vigilance oversight, the settlement would have gone through only with high-level government clearance. Journalist J Gopikrishnan, writing in The Pioneer, has pointedly asked whether Cabinet clearance was sought or the law ministry consulted before the settlement was agreed. Shockingly, no questions have been tabled in Parliament on this issue so far. How does a write-off of this magnitude happen without a follow-up investigation by the central vigilance commission (CVC) and without any effort to pin responsibility and accountability? Of equal concern: Opposition parties haven't bothered to ask questions either.
Each episode got a news cycle and a denial, and the Bank moved on. This points to a wider, more troubling trend: The Parliament, which passed the Bankers' Books Evidence Bill, 2026 by voice vote and without debate, seems to have no time to question governance failures and large write-offs, even as it moves quickly on legislation that expands its own reach into citizens' data. What the Bill did was take a century-old rule granting police officers access to an individual's bank records and make it far more consequential — because those records are now digital and can be extracted in bulk, rather than retrieved ledger by ledger.
A PSB can thus settle a US$600mn overseas dispute, tell shareholders almost nothing about how or why it happened and face no demand for accountability. It can write off ₹35,715 crore and legally refuse to name a single defaulter. Ordinary depositors, by contrast, are far more exposed — their records can be pulled or their accounts frozen even for trivial reasons, such as a delay in updating KYC details.
BoB is not alone. There have been reports of serious fraud by bank officials, leading to the siphoning of hundreds of crores of rupees, at top private banks as well.
Moneylife's study into digital loans, which I have discussed earlier, points to another worrying trend of reckless lending, alongside the rollover of several high-interest debentures offered by online platforms. (Read: Debt Traps on Phones: App Lenders Remain Unchecked)
Put together, these threads argue for caution rather than applause. The headline numbers — falling write-offs, rising recoveries, NPAs below 1% — are real and certainly positive, but they have come at a high cost. Moreover, when seen with a massive ‘settlement’ that nobody in power wants to explain or question and evergreening tricks that keep resurfacing in new forms, it is hard to be complacent.
Until BoB accounts for the NMC payout, until AIF-style evergreening or the usurious digital app lenders are made accountable and until depositors get a fraction of the discretion routinely extended to defaulters, the clean-up story does not deserve a victory lap. It deserves a scrutiny.
Across Maharashtra, restaurant and club kitchens are being steam-cleaned and scrubbed, pest-control contractors summoned and food storage practices reviewed with great urgency. After elite clubs and storied shops were raided and shut,...
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