India's banking system presents a painful paradox. On one side, there is the small farmer who walks 15 kilometres to clear a pending balance of just ₹3.46—only to have his house auctioned if he defaults. On the other side, there is the corporate house that defaults on thousands of crores and walks away virtually unscathed, with the National Company Law Tribunal (NCLT) settling their dues for a fraction of the original amount.
This is not an isolated observation. This is a systemic failure that has been called out by the Supreme Court of India itself.
A Tale of Two Borrowers
The Supreme Court recently came down heavily on banks like SBI, pointing out that institutions are "casual in granting loans of huge amounts to bigger entities but at the same time, very demanding apropos small loans where ordinary people come for personal requirement(s), which may amount to, in certain cases, borderline harassment".
Consider the numbers. Between 2014 and 2025, public sector banks wrote off ₹9.87 lakh crore in corporate loans. In percentage terms, corporates account for nearly 85.5 per cent of total loan write-offs, while farmers received barely 14.5 per cent.
Let that sink in.
85.5 per cent. For the wealthy. 14.5 per cent. For the ones who feed the nation.
The Write-Off Deception
The government tries to draw a distinction between a "loan write-off" and a "loan waiver." They claim a write-off is merely an accounting exercise and does not extinguish the borrower's liability.
But as Rajya Sabha Member Sant Balbir Singh Seechewal rightly pointed out, this distinction is misleading and designed to confuse the public.
"When the corporates fail to repay loans worth thousands of crores, the amounts are quietly written off in the name of policy. But when farmers fall into debt due to adverse weather, crop losses and the absence of Minimum Support Price, they are denied loan waivers and subjected to endless conditions," Seechewal said in Parliament.
In practical terms, write-offs offer real financial relief to corporates, while farmers remain trapped in debt with no permanent policy support.
The Face of Inequality
The numbers are staggering. Over 18.74 crore farmers are saddled with outstanding loans exceeding ₹32 lakh crore. Total outstanding farm loans are 20 times higher than the outlay for the annual agricultural budget.
Compare this with the treatment of willful defaulters. Over 16,000 willful defaulters owe ₹3.45 lakh crore to banks—individuals and entities who had the money but simply refused to pay back.
And they are left untouched.
The government tries to draw a distinction between a "loan write-off" and a "loan waiver." They claim a write-off is merely an accounting exercise and does not extinguish the borrower's liability.
But as Rajya Sabha Member Sant Balbir Singh Seechewal rightly pointed out, this distinction is misleading and designed to confuse the public.
"When the corporates fail to repay loans worth thousands of crores, the amounts are quietly written off in the name of policy. But when farmers fall into debt due to adverse weather, crop losses and the absence of Minimum Support Price, they are denied loan waivers and subjected to endless conditions," Seechewal said in Parliament.
In practical terms, write-offs offer real financial relief to corporates, while farmers remain trapped in debt with no permanent policy support.
The Face of Inequality
The numbers are staggering. Over 18.74 crore farmers are saddled with outstanding loans exceeding ₹32 lakh crore. Total outstanding farm loans are 20 times higher than the outlay for the annual agricultural budget.
Compare this with the treatment of willful defaulters. Over 16,000 willful defaulters owe ₹3.45 lakh crore to banks—individuals and entities who had the money but simply refused to pay back.
And they are left untouched.
When Banks Show Their True Colours
A bank in Shimoga, Karnataka, summoned a small farmer who had to walk 15 kilometres in the absence of a regular bus service—to clear an outstanding balance of just ₹3.46.
Meanwhile, a video clip went viral showing a woman from a self-help group being dragged to a waiting police van for her inability to pay back ₹35,000.
But when Adhunik Metaliks, a leading manufacturer of alloy and steel, settled for a 92 per cent 'haircut'—paying just ₹410 crore against outstanding dues of ₹5,370 crore—the promoters were welcomed back with open arms.
This is not banking. This is bias institutionalised.
The Farmer's Tragedy
The consequences are not just financial. They are fatal.
Farmers are being continuously pushed towards distress and suicide under mounting debt. The government has stopped maintaining official data on farmer suicides, further marginalising the agrarian crisis.
When a farmer defaults on a loan, his house and land are auctioned. His dignity is stripped. His life is shattered.
When a corporate honcho defaults on ₹50,000 crore, negotiations, restructuring, and even fresh loans follow.
Why is justice determined by the size of your bank balance?
The Structural Bias
This is not a coincidence. This is how the system is designed.
Research indicates that India's banking system currently functions as a powerful engine of inequality, systematically channelling capital upwards and constraining economic mobility for the majority.
The richest 1% control over 40% of national wealth—levels that now exceed even the colonial era. The poorest 50% hold less than 6.5% of total wealth.
Banks systematically favour large corporate borrowers and the wealthy with preferential loans. Meanwhile, SMEs and lower-income groups face credit rationing due to stringent collateral requirements and risk models that screen them out.
Complex fee structures, minimum balance requirements, and urban-centric branches systematically maintain exclusion, often draining the meagre savings of vulnerable account holders.
The ATM Penalty Trap
The hypocrisy extends to everyday banking.
Ordinary customers find themselves hemmed in by a labyrinth of restrictions. Cash withdrawals are capped. ATM transactions are limited. Crossing these thresholds invites penalties. The justification offered is familiar: curbing black money.
Yet the irony is stark.
While ordinary citizens are penalised for withdrawing their own hard-earned savings, the real architects of financial malpractice—those dealing in several thousands of crores—remain largely untouched by enforcement agencies.
According to RBI data, India has over 90 crore debit card holders, yet ATM usage has steadily declined since withdrawal limits and charges were tightened. The government collected ₹4,000 crore in penalties from ATM overuse and withdrawal breaches.
Black money is not generated by ATM withdrawals of ₹20,000. It is generated in boardrooms, shell companies, and offshore accounts. Yet the enforcement spotlight rarely shines there.
Why the Silence?
The question that haunts every common borrower is simple: Why is the banking system so afraid of the rich and powerful?
The answer is uncomfortable but clear.
Banks hesitate to take strict action against powerful defaulters, fearing political backlash or legal battles. Corporate houses often wield significant political influence, making them virtually untouchable.
This was starkly evident during the Electoral Bonds saga. An institution that keeps common customers on their toes with KYC norms became all-for-opacity over crores and crores for electoral bonds.
The same SBI that drags its feet on every small customer request moved like quicksilver to execute electoral bonds.
The Human Cost
Beyond the numbers, beyond the policies, beyond the statistics—this is about human lives.
It is about the farmer who loses his land and his dignity.
It is about the mother who cannot afford to send her children to school because the bank has frozen her account for non-maintenance of minimum balance.
It is about the small shopkeeper who is harassed by recovery agents while the corporate promoter who defaulted on thousands of crores continues to live in luxury.
This is the human cost of a corrupt banking system.
What Needs to Change
If India truly aspires to be a global economic power, this double standard cannot continue.
Accountability must be equal. Corporate defaulters should face the same public scrutiny as small borrowers.
The NCLT must not become a tool for corporate escape. The 92 per cent 'haircut' given to Adhunik Metaliks is an insult to every farmer who lost his land over a small loan.
Policies must be graded to give the maximum benefit to those at the lowest rung of the social and financial strata. As the Supreme Court rightly observed, the procedure adopted by banks "can certainly be made easier and fairer" for small loan-seekers and at the stage of recovery.
The distinction between "loan write-off" and "loan waiver" must be abolished. When corporate loans worth lakhs of crores are written off, they are effectively waived. It is time to stop misleading the public.
Enforcement must target big-ticket fraud with the same zeal shown in penalising ATM withdrawals.
The Bottom Line
The Indian banking system has become a mirror of inequality—punishing the powerless and pampering the powerful.
The banks are not just corrupt. They have institutionalised a system that systematically crushes the common man while protecting the elite.
Until accountability is enforced equally across all sections of society, the common man will continue to suffer, and the powerful will continue to exploit the system with impunity.
It is time for change. It is time for justice. It is time to end this banking bias.
What are your experiences with Indian banks? Have you faced harassment over small loans while watching corporate defaulters walk free? Share your story in the comments below.
Disclaimer: Data and statistics cited in this article are based on publicly available information from government sources, parliamentary records, and Supreme Court observations. The views expressed are intended to highlight systemic issues and are not directed at any specific individual or institution.
A bank in Shimoga, Karnataka, summoned a small farmer who had to walk 15 kilometres in the absence of a regular bus service—to clear an outstanding balance of just ₹3.46.
Meanwhile, a video clip went viral showing a woman from a self-help group being dragged to a waiting police van for her inability to pay back ₹35,000.
But when Adhunik Metaliks, a leading manufacturer of alloy and steel, settled for a 92 per cent 'haircut'—paying just ₹410 crore against outstanding dues of ₹5,370 crore—the promoters were welcomed back with open arms.
This is not banking. This is bias institutionalised.
The Farmer's Tragedy
The consequences are not just financial. They are fatal.
Farmers are being continuously pushed towards distress and suicide under mounting debt. The government has stopped maintaining official data on farmer suicides, further marginalising the agrarian crisis.
When a farmer defaults on a loan, his house and land are auctioned. His dignity is stripped. His life is shattered.
When a corporate honcho defaults on ₹50,000 crore, negotiations, restructuring, and even fresh loans follow.
Why is justice determined by the size of your bank balance?
The Structural Bias
This is not a coincidence. This is how the system is designed.
Research indicates that India's banking system currently functions as a powerful engine of inequality, systematically channelling capital upwards and constraining economic mobility for the majority.
The richest 1% control over 40% of national wealth—levels that now exceed even the colonial era. The poorest 50% hold less than 6.5% of total wealth.
Banks systematically favour large corporate borrowers and the wealthy with preferential loans. Meanwhile, SMEs and lower-income groups face credit rationing due to stringent collateral requirements and risk models that screen them out.
Complex fee structures, minimum balance requirements, and urban-centric branches systematically maintain exclusion, often draining the meagre savings of vulnerable account holders.
The ATM Penalty Trap
The hypocrisy extends to everyday banking.
Ordinary customers find themselves hemmed in by a labyrinth of restrictions. Cash withdrawals are capped. ATM transactions are limited. Crossing these thresholds invites penalties. The justification offered is familiar: curbing black money.
Yet the irony is stark.
While ordinary citizens are penalised for withdrawing their own hard-earned savings, the real architects of financial malpractice—those dealing in several thousands of crores—remain largely untouched by enforcement agencies.
According to RBI data, India has over 90 crore debit card holders, yet ATM usage has steadily declined since withdrawal limits and charges were tightened. The government collected ₹4,000 crore in penalties from ATM overuse and withdrawal breaches.
Black money is not generated by ATM withdrawals of ₹20,000. It is generated in boardrooms, shell companies, and offshore accounts. Yet the enforcement spotlight rarely shines there.
Why the Silence?
The question that haunts every common borrower is simple: Why is the banking system so afraid of the rich and powerful?
The answer is uncomfortable but clear.
Banks hesitate to take strict action against powerful defaulters, fearing political backlash or legal battles. Corporate houses often wield significant political influence, making them virtually untouchable.
This was starkly evident during the Electoral Bonds saga. An institution that keeps common customers on their toes with KYC norms became all-for-opacity over crores and crores for electoral bonds.
The same SBI that drags its feet on every small customer request moved like quicksilver to execute electoral bonds.
The Human Cost
Beyond the numbers, beyond the policies, beyond the statistics—this is about human lives.
It is about the farmer who loses his land and his dignity.
It is about the mother who cannot afford to send her children to school because the bank has frozen her account for non-maintenance of minimum balance.
It is about the small shopkeeper who is harassed by recovery agents while the corporate promoter who defaulted on thousands of crores continues to live in luxury.
This is the human cost of a corrupt banking system.
What Needs to Change
If India truly aspires to be a global economic power, this double standard cannot continue.
Accountability must be equal. Corporate defaulters should face the same public scrutiny as small borrowers.
The NCLT must not become a tool for corporate escape. The 92 per cent 'haircut' given to Adhunik Metaliks is an insult to every farmer who lost his land over a small loan.
Policies must be graded to give the maximum benefit to those at the lowest rung of the social and financial strata. As the Supreme Court rightly observed, the procedure adopted by banks "can certainly be made easier and fairer" for small loan-seekers and at the stage of recovery.
The distinction between "loan write-off" and "loan waiver" must be abolished. When corporate loans worth lakhs of crores are written off, they are effectively waived. It is time to stop misleading the public.
Enforcement must target big-ticket fraud with the same zeal shown in penalising ATM withdrawals.
The Bottom Line
The Indian banking system has become a mirror of inequality—punishing the powerless and pampering the powerful.
The banks are not just corrupt. They have institutionalised a system that systematically crushes the common man while protecting the elite.
Until accountability is enforced equally across all sections of society, the common man will continue to suffer, and the powerful will continue to exploit the system with impunity.
It is time for change. It is time for justice. It is time to end this banking bias.
What are your experiences with Indian banks? Have you faced harassment over small loans while watching corporate defaulters walk free? Share your story in the comments below.
Disclaimer: Data and statistics cited in this article are based on publicly available information from government sources, parliamentary records, and Supreme Court observations. The views expressed are intended to highlight systemic issues and are not directed at any specific individual or institution.
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