Almost three and a half decades ago, shortly after the Indian government under then prime minister PV Narasimha Rao and finance minister Manmohan Singh launched widespread economic reforms in 1991, an ambitious rice trader branched out into an unlikely sector—broadcast media. The government’s moves to unshackle the private sector led to an economic boom, creating millions of jobs, growing household incomes and boosting production and demand for everything from soaps and consumer appliances to education and entertainment. And the rice trader’s gamble paid off.
Why are we talking about the trader? Because the trader-turned-tycoon has himself been in the news this past week.
That trader was Subhash Chandra. By the turn of the century, his Essel Group owned one of India’s biggest media empires under the Zee brand providing round-the-clock television news and producing movies, music and entertainment shows. It also opened amusement parks under EsselWorld, entered the satellite TV business under Dish TV, launched pre-schools under Kidzee and K-12 schools under the Mount Litera brand.
Chandra didn’t stop there. The Essel Group also entered the infrastructure sector, bidding for everything from highways to power projects and solar energy plants. And that’s when the cookie began to crumble.
The entry into the capex-heavy sectors ballooned the group’s debt to as high as Rs 45,000 crore, according to media reports. To fund that expansion, the group took on loans by pledging shares of the flagship Zee Entertainment. Chandra even provided personal guarantees for some of that debt. When Zee’s stock crashed in 2019, the group struggled to pay off its loans and began selling its assets. Those personal guarantees have now come back to haunt Chandra.
On August 25, a single-member bench of the National Company Law Tribunal allowed Chandra to pay Rs 6.5 crore to clear his creditors’ claims that totaled a staggering Rs 22,006 crore. In other words, the creditors will get less than 0.1% of the amount they claimed from Chandra. After much hue and cry, a five-member special bench of the NCLT this week stayed that order and directed Chandra, in his capacity as guarantor, not to sell or transfer his properties. The tribunal also decided to rehear the matter, noting that there was no clear majority view in the earlier proceedings.
So, what exactly is this particular case?
The case began in 2024, when Indiabulls Housing Finance initiated personal insolvency proceedings against Chandra over personal guarantees given for borrowings by Essel Group-linked companies. It is separate from corporate insolvency proceedings involving group companies and from regulatory proceedings concerning Zee Entertainment.
The case becomes more striking when Chandra’s earlier reported wealth is placed alongside his current assets. Creditors pointed to net-worth certificates showing figures of about Rs 45,888 crore in 2017 and Rs 40,562 crore in 2018. The insolvency process recorded Chandra’s current assets at roughly Rs 31.79 crore.
That gap does not, by itself, establish what happened to the wealth reflected in the earlier certificates.
Creditors sought forensic investigation and asset tracing. The NCLT held that the old net-worth certificates alone did not establish that assets had been concealed or diverted. It also held that appointing a forensic auditor or asset-tracing agency was not a mandatory precondition for considering a repayment plan.
The plan received 80.8% of the voting share, while creditors opposing it accounted for 19.2%. The earlier tribunal order held that the plan could provide a better outcome for creditors than bankruptcy and that the tribunal would not ordinarily substitute its own commercial assessment for that of creditors.
Banks have since raised another objection, saying at least five entities accounting for 61.78% of the votes and backing the plan were linked to Chandra as associates or related parties. The matter is now back before the tribunal.
For lenders, the case raises a broader question: how effective is a personal guarantee when the guarantor’s available assets are far below the liabilities being guaranteed?
A guarantee can strengthen a lender’s claim. But its practical value ultimately depends on what can be recovered when that claim has to be enforced.
That question remains open. The larger bench will now revisit the repayment plan and the issues surrounding Chandra’s assets and creditor recoveries.
Another Change at the Top
From Chandra’s Zee and Essel, let’s now move on to another top Indian conglomerate.
HDFC Bank, India’s most valued lender, is facing a leadership transition at a delicate moment. Sashidhar Jagdishan has decided not to seek another term as chief executive, ending his tenure when his current term expires on October 26.
Jagdishan had been expected to seek a third term. His decision comes months after the sudden resignation of Atanu Chakraborty as the bank’s chairman in March, raising investor concerns over governance. An external review completed in June, however, found no evidence to substantiate the governance issues raised by the former chairman.
The bank has since faced another governance-related episode. In July, its board penalised three senior executives, including Jagdishan, after concluding that employees involved in setting deposit rates for a state agency had engaged in “business overreach”.
The board now plans to fast-track the search for Jagdishan’s successor.
The development has come at a crucial time because investors have been questioning HDFC Bank on several fronts. Its shares have fallen 27% since the start of the year, with a large part of the decline coming after the former chairman’s departure. Foreign investors held nearly 40% of the bank’s stock as of June.
Investors have also questioned the benefits of HDFC Bank’s 2023 merger with its then parent, HDFC Ltd. On Thursday, its shares fell to a more than two-year low after two US law firms filed a proposed federal securities class-action lawsuit. The bank has said it believes the lawsuit is without merit and intends to defend itself.
The latest financial numbers provide some context. HDFC Bank reported a 5% rise in standalone net profit to Rs 19,060 crore for the quarter ended June 30. Gross non-performing loans were 1.17% of total loans. The numbers point to a bank that remains large and profitable, even as investors continue to assess whether the benefits of the merger are beginning to show up in its performance.
That leaves the incoming CEO with more than a straightforward succession to manage. The next leader will inherit a large and profitable bank, but also a set of questions around governance, the post-merger trajectory and investor confidence.
Markets tend to read leadership changes in the context in which they happen. At HDFC Bank, the next appointment will therefore be watched not only as a change of person, but for what it says about the bank’s next phase.
A Stronger Picture
These corporate developments were, however, overshadowed by macroeconomic news.
The statistics ministry this week said India’s real GDP grew 7.8% in the April-June quarter of FY27, well above the 7% growth the Reserve Bank of India had estimated for the quarter.
More importantly, the recent growth picture has itself been revised upwards. FY26 growth is now estimated at 7.8%, while growth in the January-March quarter has been revised to 8.6%.
The growth number is impressive, although critics say that the number was high because the government reduced the GDP estimate for the year-earlier period and that the high growth wasn’t reflecting in jobs and investments.
On its part, the government says GDP growth was reasonably broad-based. Manufacturing grew 9.2% in Q1, while services expanded 10%. Within services, financial, real estate, IT and professional services grew 12.1%. The secondary sector grew 8.6%, while the tertiary sector expanded 10%. Agriculture, forestry and fishing grew 3.6%.
Investment was another important part of the picture. Gross fixed capital formation—a measure of investment in assets such as machinery, buildings and infrastructure—grew 11.9% in real terms. At current prices, it rose 20.4%, taking its share of GDP to 34.3% from 31.4% a year earlier. Private consumption grew 7.1%.
The numbers, therefore, point to more than one source of growth. Manufacturing and services are expanding, investment has strengthened, and household consumption continues to grow.
But one strong quarter cannot tell us how long that pace will last. That is where the rest of the economic picture matters.
Consumer inflation rose to 4.45% in July from 4.38% in June, while food inflation increased to 5.52% from 5.32%. Both remained within the RBI’s 2-6% tolerance band, although headline inflation was above the central bank’s 4% target for a second consecutive month.
Crude oil is another source of uncertainty. India imports 90% of the crude oil it uses, so sustained changes in global oil prices can feed into the domestic inflation picture.
The RBI kept the repo rate at 5.25% in August and had projected FY27 growth at 6.7%. The latest quarterly number has come in above that projection, although one quarter is not enough to establish the growth rate for the full year.
GDP estimates also change as more information becomes available. The latest national accounts have introduced a new GDP series, with 2022-23 as the base year, along with changes to the way parts of the economy are measured.
The revisions to the recent past are, therefore, worth looking at alongside the Q1 number. Growth for FY24 has been revised to 7.3%, FY25 to 7.2% and FY26 to 7.8% — each 0.1 percentage point higher than previously estimated.
That changes the starting point from which we look at the economy, even if it tells us little about how the next few quarters will unfold.
For now, the data shows an economy entering FY27 with stronger recent momentum than earlier estimates suggested.
What remains unclear is how durable that momentum will be as inflation, energy prices and global conditions shape the months ahead. For investors, that is the most useful way to read a strong GDP number. It is not an answer about what comes next. It is another piece of evidence about where the economy stands today.
Problem of Plenty
Another key development this week pertained to dollar inflows into the Indian economy.
When the Reserve Bank of India launched a special forex swap window in June, it expected to attract a substantial response. What came in was considerably larger: by August 31, banks had reported $136.38 billion of foreign-currency inflows under the facility.
The bulk came through Foreign Currency Non-Resident (Bank), or FCNR(B), deposits. They accounted for $127.23 billion, or more than 93% of the total. Overseas foreign-currency borrowings added $5.26 billion and external commercial borrowings another $3.89 billion, according to provisional figures.
The facility was designed to address a fairly specific problem. Foreign-currency deposits are useful to banks, but the currency risk involved in bringing those dollars onshore can make them expensive to raise. The RBI’s June 8 facility allowed banks to swap eligible three-year to five-year FCNR(B) deposits with it at par, effectively removing the usual market cost of hedging the principal. The deposits mobilised under the scheme were also exempted from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements.
That changed the economics for banks. Several large lenders raised FCNR(B) rates to around 6-6.5%, while some smaller banks offered more than 7%, making Indian deposits more competitive for overseas depositors.
The response accelerated towards the end. As of August 21, total inflows under the three routes stood at $72.85 billion, including $65.40 billion through FCNR(B). Ten days later, the total had almost doubled.
The RBI had initially planned to accept fresh FCNR(B) deposits until September 30. It brought that deadline forward to August 31, citing the “encouraging response” and resultant forex inflows. Swaps against deposits already mobilised can still be undertaken with the RBI until September 11. The ECB and OFCB windows remain open until December 31.
There is a useful historical comparison. In 2013, when India faced a much sharper external-sector squeeze, the FCNR(B) swap scheme alone mobilised about $26 billion; the two related swap windows together brought in roughly $34 billion. The latest response is therefore much larger in absolute terms, even though the economic conditions are quite different.
The cost, however, is harder to pin down. SBI Research estimated that if a 3% annual hedging cost persisted over five years, the notional cost on a $70 billion FCNR(B) corpus would amount to about $10.5 billion, or 15% of the corpus. Going by that estimate, the actual cost could be closer to $20 billion given the $127 billion haul. To be sure, that is an estimate based on an assumed hedging cost, not a bill already incurred by the RBI.
The final accounting will tell us more about how much of this mobilisation translates into durable foreign-currency funding for banks, and what the eventual cost of the support looks like. For now, the clearest signal is simply the scale of the response to a relatively targeted policy intervention.
Market wrap
India’s stock market benchmarks recorded losses for the fourth week in a row, weighed down by concerns related to high crude oil prices and rising bond yields.
The Nifty 50 lost 1.2% while the BSE Sensex slipped 1% this week, with Friday being the only day of gains after four sessions of losses. In the broader market, 12 of the 16 major sectors declined. Small-caps inched 0.1% higher but mid-caps fell 1.5%.
Only 11 Nifty 50 and six Sensex stocks ended in the green. State-run Coal India was the top performer, rising 3.6% on improving quarterly earnings. Heavyweight Reliance Industries was at No. 2, climbing 3.2%. Tata Steel, Axis Bank, ONGC, Grasim and NTPC were among the other winners.
Adani Enterprises was the biggest laggard, slumping 7.3%, while Adani Ports was mostly flat.
Auto stocks slid on concerns of slowing sales growth amid a high base. Eicher Motors lost 5.3%, Maruti fell 5.1%, Mahindra & Mahindra dropped 4.9% and Tata Motors Passenger Vehicles slipped 2.1%.
IT stocks fell after the rupee rose—a stronger currency weighs on exports—thanks to the $127 billion in dollar deposits that Indian banks collected under a special RBI scheme. Tech Mahindra was down 3.2% while Wipro lost 2.1%.
Other stocks that slipped at least 3% included Tata Consumer, Cipla, InterGlobe Enterprises, Asian Paints, Nestle India, Titan and Shriram Finance.
Other Headlines
- SEBI to review derivatives settlement methodology after feedback on closing auction session
- UltraTech Cement enters wires and cables business with Rs 1,800-crore investment
- Kenya’s president orders Tata Chemicals to end operations in the country
- Online furniture rental platform Rentomojo sets price band of Rs 384-404 for IPO
- Asset Reconstruction Company (India) Ltd sets price band of Rs 132-139 for Rs 733 crore IPO
- Hiranandani Group-backed data centre operator Yotta plans to launch IPO in Jan-March 2027
- Coal India to sell 10% stake in unit Mahanadi Coalfields’ IPO
- PayPal cuts 220 India jobs as part of restructuring plan
- Uber to lay off 10% employees in biggest cuts since COVID-19
- Regional airline Fly91 orders 40 ATR turboprops to expand in smaller cities
- Hexaware CEO Srikrishna Ramakarthikeyan resigns; EXL’s Vivek Jetley to take over
- HSBC’s India Services Purchasing Managers’ Index rises to 54.1 in August from July’s 53.3
- HSBC India Manufacturing Purchasing Managers’ Index falls to 52.8 in August from 53.5 in July
- Reliance Consumer enters ice cream market with Rs 10 products
- Maruti Suzuki sales jump 3% in August to 219,220 units
- Mahindra & Mahindra August sales surge 42%, Tata Motors Passenger Vehicles sales up 56%
- GRT Jewellers buys controlling stake in Tribhovandas Bhimji Zaveri for Rs 1,034 crore
That’s all for this week. Until next week, happy investing!
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