PSU Banks in India: Massive Corporate Defaults and Why You Need to Know

Mumbai, March 18, 2026: Public sector banks (PSUs) in India continue to grapple with huge corporate loan defaults, even as official reports suggest non-performing assets (NPAs) are at historic lows. Data from TransUnion CIBIL and multiple banking sources reveal that large corporate defaulters owe nearly ₹29 lakh crore, creating a hidden risk in the banking sector.

NPAs vs Large Corporate Defaulters

NPA (Non-Performing Asset)

Loans overdue for more than 90 days, regardless of the amount. NPAs can sometimes be resolved through restructuring.

Large Defaulters

Borrowers owing ₹1 crore or more, often involved in prolonged legal recovery proceedings (suit-filed cases). Large defaults involve complex multi-bank exposures, unsecured loans, and extended litigation, making recovery slower and more uncertain.

PSU Banks’ Exposure: The Big Picture

Across India, 11 major PSU banks are handling thousands of recovery cases for large defaulters, covering multiple sectors including metals, infrastructure, power, telecom, and real estate.

Banks with the Highest Exposure

Smaller PSU banks like UCO Bank (₹1.11 lakh crore) and Bank of India (₹96,512 crore) also face significant defaults ranging from ₹27,954 crore to over ₹1 lakh crore.

Bank of Baroda’s Large Defaulters

Bank of Baroda ranks fifth among PSU banks in exposure to high-value defaulters, with over 9,000 civil suits filed nationwide (9,013 as of December 2025).

Top Defaulter

• Reliance Communications (Anil Ambani) – 11 cases totaling ₹23,151 crore.

• Ambani-linked firms collectively owe over ₹48,282 crore to 13 banks. Including Bank of Baroda’s exposure, the total reaches ₹71,433 crore.

Other Major Defaulters

• Lanco Group – ₹7,215 crore

• Gayatri Projects (Hyderabad) – ₹7,142 crore

• Videocon Group – ₹5,296 crore

• GTL Limited (Mumbai) – ₹5,142 crore

Note: Several companies like GTL Limited have faced FIRs for alleged banking fraud, though courts have sometimes quashed cases due to lack of procedural details.

Other Significant Defaulters Across PSU Banks

• Concast Steel and Power (Kolkata) – ₹6,287 crore

• Frost International – ₹4,112 crore

• Gitanjali Gems & Gitanjali Export Corporation – ₹2,194 crore

• Spice Trading Corporation (Bangalore) – ₹2,729 crore

• EMI Transmission (Mumbai) – ₹2,705 crore

• Pratibha Industries – ₹2,307 crore

• Emco Ltd / EMC Ltd – ~₹1,750 crore

Other firms with dues between ₹600–1,000 crore include Surya Pharmaceutical, ABG Shipyard, Kingfisher Airlines, Golden Jubilee Hotels, Kwality Ltd, Zoom Developers, Sai Infosystems, Vimal Oil & Foods, Forever Precious Jewellery, and others like Transstroy India, Gammon India, Parekh Aluminex.

Why Recovery is Challenging

Multi-Bank Exposure

Borrowers owe money to several banks simultaneously, complicating legal recovery.

Unsecured Loans

Many loans lack collateral, or collateral like pledged shares was manipulated/inflated, leaving banks with limited assets to recover.

Loan Splitting

High-value loans are split into smaller accounts, increasing the number of recovery cases.

Legal Delays

Long court proceedings slow down the recovery process, particularly for high-profile borrowers.

Investor Implications

• Official NPA numbers may appear low (decade-low levels reported by RBI/Govt), but actual recovery risks from large defaulters and litigation cases are substantial.

• Investors should review bank portfolios for exposure to large defaulters and recovery performance.

• Ongoing legal and procedural delays suggest potential impact on PSU bank stability and returns.

Key Takeaways

• Bank of Baroda ranks 5th among PSU banks for exposure to corporate defaulters.

• Top defaulters include Reliance Communications, Lanco, Videocon, GTL Limited, and multiple others across sectors.

• Multi-bank loans, unsecured lending, and long court cases make recovery difficult.

• Investors must analyze real risks behind headline NPA numbers before investing in PSU banks.

Disclaimer: This information is for informational purposes only and is compiled from publicly available sources. It is not financial advice.