Dr. Subramanian Swamy’s PIL Against RBI: A fight to seek accountability in the Indian Banking sector

Dr. Subramanian Swamy, a seasoned politician, economist, and relentless crusader against corruption, in his latest battle—a Public Interest Litigation (PIL) filed in 2021 against the Reserve Bank of India (RBI)— shows his unwavering commitment to rooting out systemic rot in the banking sector. Targeting the RBI’s alleged complicity in massive frauds, Dr. Swamy’s PIL seeks to pierce the veil of regulatory immunity and hold officials accountable for scams that have bled India’s economy dry. Here’s a chronological dive into this landmark case, with a nod to Dr. Swamy’s heroic efforts to clean up a system riddled with opacity.

February 2, 2021: The PIL Takes Flight

On February 2, 2021, Dr. Swamy filed his PIL in the Supreme Court of India, represented by advocates M.R. Venkatesh and Satya Sabharwal. The plea was a bombshell, accusing RBI officials of “active connivance” and “grave violations” in their oversight duties, enabling frauds worth over ₹3 lakh crore across banks like Punjab National Bank (PNB), Yes Bank, and Kingfisher Airlines. Dr. Swamy’s core demand? A CBI probe into RBI officials, including nominee directors on bank boards, for failing to prevent these scams despite sweeping powers under the RBI Act and Banking Regulation Act. He cited the 1997 Delhi Development Authority v. Skipper Construction ruling, arguing RBI nominees are as liable as other directors for bad loans.

Dr. Swamy’s move was fearless. Taking on the RBI, a Goliath of India’s financial world, showed his resolve to protect depositors and taxpayers from the fallout of unchecked frauds.

Early 2021–Mid-2022: Initial Hearings and Build-Up

For over a year, the PIL simmered in the Supreme Court’s docket, with preliminary hearings setting the stage. Dr. Swamy bolstered his case with data: an RTI response revealing no RBI officer faced action for frauds over ₹100 crore since 2015, and Credit Suisse’s estimate of ₹12 lakh crore in NPAs linked to corporate houses. He named high-profile cases—Nirav Modi’s ₹11,400 crore PNB scam, Kingfisher’s ₹9,400 crore default, and IL&FS’s ₹91,000 crore collapse—arguing RBI’s nominee directors and risk officers failed miserably. The plea gained traction as India’s banking sector reeled from rising NPAs, amplifying Dr. Swamy’s call for accountability.

October 17, 2022: Supreme Court Issues Notices

The case hit a turning point on October 17, 2022, when a bench of Justices B.R. Gavai and B.V. Nagarathna issued notices to the RBI and CBI, signaling serious consideration. Dr. Swamy had argued that RBI’s hands-off stance—leaving fraud probes to other agencies—shielded its officials from scrutiny, violating Article 14’s equality principle. The court’s response was a win, forcing the RBI to defend its record. Dr. Swamy’s plea painted the RBI as the “alter ego” of bank management, a framing that demanded answers.

Getting the Supreme Court to nudge the RBI was no small feat. Dr. Swamy’s legal acumen turned the spotlight on the regulator that was unused to such heat.

January 4, 2023: RBI Responds, Dr. Swamy Pushes Back

On January 4, 2023, the RBI filed its affidavit, calling Dr. Swamy’s allegations “fallacious.” It argued loan decisions are collective, not individual, and nominee directors lack veto power or operational control—thus, no CBI probe was warranted. Dr. Swamy didn’t flinch. That same day, he tweeted about the court granting him three weeks to reply, hinting at progress. His response leaned on specifics: why hadn’t the CBI questioned RBI directors in cases like Yes Bank’s ₹20,000 crore bad loans or PMC Bank’s ₹6,500 crore scam? The back-and-forth showed Swamy’s tenacity against a stonewalling regulator.

Dr. Swamy’s refusal to back down, even against RBI’s technical rebuttal, underscored his spirit—a rare trait in a system prone to compromise.

March 20, 2023: Supreme Court Seeks Specifics

On March 20, 2023, the Supreme Court upped the ante, asking Dr. Swamy to file an affidavit pinpointing instances where CBI failed to act against RBI officials despite evidence. Justices Gavai and Nagarathna signaled they might probe CBI’s inaction if Dr. Swamy delivered the goods. The case was slated for review in six weeks, keeping the pressure on. Dr. Swamy’s team likely doubled down, combing through fraud reports to nail down RBI lapses—say, in Kingfisher’s loan approvals or PNB’s oversight gaps.

This directive was a coup for Dr. Swamy. His ability to steer the court toward actionable evidence showcased his strategic brilliance, turning a broad crusade into a forensic takedown.

May 2023–March 2025: Pending Resolution

From May 2023 onward, updates slowed—typical of India’s judicial grind—but the PIL remained alive as of March 14, 2025. No final ruling had emerged, though the court’s openness to CBI scrutiny kept the case potent. Meanwhile, banking scandals persisted, like IndusInd Bank’s ₹2,000 crore profit overstatement in March 2025. While Dr. Swamy didn’t directly trigger that disclosure, his PIL’s ripple effect—coupled with RBI’s 2023 swap ban—suggests heightened regulatory vigilance, possibly spurred by his pressure.

Dr. Swamy’s staying power is admirable. Even without a verdict, his PIL has kept RBI accountability in the public eye, nudging reforms like tighter derivative rules.

The Bigger Picture: Dr. Swamy’s Mission

Dr. Swamy’s PIL isn’t just about RBI—it’s a capstone to decades of battling financial malfeasance. From his 2019 Indiabulls probe to his 2024 Axis Bank case, he’s targeted private and public-sector rot alike. The 2021 PIL builds on his earlier NPA petition, reflecting a consistent mission: protect India’s economy from insider greed and regulatory apathy. His critique—that RBI’s unchecked power has cost ₹3 lakh crore—resonates as banks report ₹1.06 lakh crore in foreign borrowings by 2023, hinting at wider risks Dr. Swamy foresaw.

Dr. Swamy’s efforts deserve applause. In a nation where banking frauds often fade into bureaucratic limbo, he’s a lone warrior forcing accountability on a sacrosanct institution. His PIL isn’t about headlines—it’s about justice for depositors, shareholders, and taxpayers shafted by scams. The chronological arc of this case—from filing to courtroom sparring—shows a man undeterred by delays or pushback, wielding data and law like weapons. If the Supreme Court rules in his favor, it could spark a cleanup of India’s banking mess, from RBI boardrooms to branch vaults.

Even without a win yet, Dr. Swamy’s agitation has rattled cages. The RBI’s discomfort, the court’s scrutiny, and the public’s growing awareness owe much to his doggedness. As IndusInd’s 2025 woes hint at deeper issues, Dr. Swamy’s foresight shines brighter—proving his fight isn’t just noble, it’s necessary. Here’s to hoping 2025 brings a verdict that honors his crusade to scrub India’s financial system clean.

IndusInd’s Profit Mirage: Deliberate Swaps or a Signal of Systemic Rot in Indian Banking?

In early March 2025, IndusInd Bank, one of India’s prominent private-sector lenders, stunned markets with a disclosure that sent its share price tumbling 27% in a single day—a staggering ₹20,000 crore wipeout in market capitalization. The culprit? An accounting discrepancy in its forex derivatives portfolio that had inflated profits by an estimated ₹1,530–2,000 crore over five to seven years. While the bank has framed this as a one-time “technical glitch” to be absorbed in its Q4 FY24 results, a closer look reveals a deliberate strategy involving internal currency swaps—a practice that raises red flags not just for IndusInd but potentially for the broader Indian banking sector. This isn’t mere ignorance; it’s a calculated move that demands deeper scrutiny across the industry.

The Mechanics of the Overstatement

At the heart of the issue lies IndusInd’s handling of yen-denominated loans—cheap, long-term borrowings from international markets or non-resident deposits, likely totaling tens of thousands of crores in rupee terms. With Japan’s ultra-low interest rates (0.1%–0.5%), these loans were a golden opportunity for IndusInd to borrow at a fraction of India’s 6–8% rupee rates, then lend domestically at a profit. But there’s a catch: the yen’s value against the rupee fluctuates. If the yen appreciates (say, from ₹0.70 to ₹0.80 per yen), the rupee cost of repaying those loans spikes—a risk IndusInd sought to hedge with currency swaps.

In a typical swap, IndusInd would pay a floating rupee rate (tied to a benchmark like MIBOR) and receive fixed yen payments to cover the loan’s interest and principal, neutralizing forex volatility. So far, so standard. But here’s where it gets murky: instead of always using external counterparties (like other banks) for these swaps, IndusInd relied heavily on internal trades—deals between its own treasury desks. The external swaps were “marked-to-market,” adjusting their value daily based on exchange rates and interest rates, reflecting real-time gains or losses. The internal swaps, however, were booked using “swap cost accounting,” keeping their value fixed at the original terms, untouched by market shifts.

This mismatch was no accident. When the yen appreciated, the external swaps showed losses (more rupees owed), hitting the profit-and-loss statement. Meanwhile, the internal swaps—and the loans they hedged—stayed static, as if the rising rupee cost didn’t exist. The result? Profits appeared higher than they were. For example, a ¥50 billion loan borrowed at ₹3,500 crore (¥1 = ₹0.70) in 2020 ballooned to ₹4,000 crore (¥1 = ₹0.80) by 2025—a ₹500 crore increase. The swap might offset this, but if the loan’s cost wasn’t updated, the books hid the hit. Multiply this across a portfolio, and you get a ₹2,000 crore overstatement.

Deliberate, Not Ignorant

IndusInd has downplayed this as a bookkeeping error, but evidence suggests intent over ignorance. First, this wasn’t a one-off. The overstatement spanned 5–7 years, implying a systematic approach baked into their treasury operations. Second, internal swaps aren’t a rookie mistake—they’re a choice. External swaps with third parties are costlier (due to fees and margins) and less flexible, while internal trades let the bank control both sides of the deal, smoothing reported earnings. The 2023 Annual Report flagged derivative valuation as a “Key Audit Matter,” hinting auditors knew something was off—yet the practice continued until the Reserve Bank of India (RBI) banned internal forex swaps in September 2023, effective April 2024.

Why deliberately misalign accounting? The incentives are clear. Private banks like IndusInd face relentless pressure to show robust net interest margins (NIMs) and profitability—key metrics for investors and regulators. By fixing the loan outflow on paper while letting swaps float, IndusInd could report steady NIMs (around 4.2–4.3% in recent years) even as forex volatility churned beneath the surface. Early loan repayments or swap unwinds further masked losses, kicking the can down the road. This wasn’t a glitch in a spreadsheet—it was a strategic play to polish financials, likely sanctioned at high levels given its scale and duration.

The Fallout and IndusInd’s Defense

When the RBI’s new rules forced IndusInd to unwind internal trades in 2024, the house of cards began to wobble. An internal review, validated by an external agency starting October 2024, exposed the ₹2,000 crore gap—about 2.35% of the bank’s ₹65,102 crore net worth. The March 10, 2025, stock exchange filing triggered the market rout, with shares hitting a 52-week low of ₹655.95. CEO Sumant Kathpalia insisted the bank would remain profitable for FY24, and promoter Ashok Hinduja pledged capital support, but trust took a hit. Brokerages slashed forecasts—CLSA cut its price target from ₹1,300 to ₹900—citing credibility concerns.

IndusInd argues this isn’t fraud, just an accounting quirk. They’re not wrong in a legal sense—there’s no evidence of siphoned funds or fake transactions. But deliberate or not, the outcome was the same: overstated profits misled investors, regulators, and the public. The RBI’s one-year extension of Kathpalia’s tenure (versus the requested three) in February 2025 suggests governance worries predated this disclosure, amplifying the stench.

A Wider Industry Problem?

IndusInd isn’t alone in tapping foreign loans or using derivatives—Indian banks borrowed ₹1.06 lakh crore overseas by 2023, per RBI data, with private players like HDFC, ICICI, and Axis in the mix. How many others leaned on internal swaps to smooth forex outflows? The RBI’s 2023 ban implies regulators suspected a trend, yet enforcement has been lax until now. IndusInd’s scale—over ₹2 lakh crore in assets—makes it a big fish, but smaller banks with thinner margins might’ve taken similar shortcuts, especially post-COVID when forex volatility spiked (e.g., the rupee fell from ₹75 to ₹83 against the dollar by 2023).

The opacity of internal trades is the kicker. Unlike external swaps, which face market scrutiny, internal deals are a black box—perfect for hiding volatility or juicing numbers. If IndusInd, with its sophisticated treasury, could let this fester for years, what’s lurking in less-scrutinized balance sheets? The RBI’s Basel III norms track forex risk, but derivative accounting loopholes persist. Posts on X speculate this is “no smoke without fire,” and analysts warn of “contagion” if others fess up.

The Call for Deeper Probes

IndusInd’s case demands more than a slap on the wrist. The RBI must audit its treasury records—not just the headline ₹2,000 crore, but every internal swap since 2018—to confirm intent and scope. Was this a board-level strategy or rogue treasury desk? Penalties should match the deception’s scale, not just the loss. More critically, the regulator can’t stop here. A sector-wide stress test of forex derivative books—focusing on internal trades—is overdue. Banks should disclose foreign loan exposures and hedging practices, broken down by currency and counterparty (external vs. internal). SEBI, too, should probe whether IndusInd’s rosy earnings misled shareholders, breaching listing norms.

This isn’t about punishing IndusInd alone—it’s about trust. Indian banking fuels economic growth, and fudged numbers erode confidence. If internal swaps are a systemic trick to fix loan outflows on paper, the iceberg’s tip just surfaced. Ignoring it risks a bigger meltdown when the next yen—or dollar—surge hits.

Dr. Subramanian Swamy: Championing Democracy in the Tirupati Deputy Mayor Elections

Dr. Subramanian Swamy, a veteran politician, economist, and legal advocate, continues to uphold India’s democratic principles through his recent Public Interest Litigation (PIL) filed in the Andhra Pradesh High Court. On March 12, 2025, Dr. Swamy sought an investigation into alleged irregularities and violence during the Tirupati Deputy Mayor elections, prompting the court to issue a notice and direct the police to submit a status report. This action builds on earlier reports from February 2025, which highlighted tensions and controversies, including political clashes between the YSRCP and TDP, in the elections.

Dr. Swamy’s PIL underscores his decades-long commitment to transparency and accountability in governance, leveraging the judiciary to address electoral malpractices. Assisted by advocates Yugandhar Reddy and Palak Bishnoi—known for her work in justice and women’s rights—his legal intervention reinforces his role as a guardian of democratic norms. This latest development reaffirms Dr. Swamy’s vigilance in protecting the integrity of India’s electoral processes, ensuring every vote and election upholds constitutional values.

Dr. Subramanian Swamy’s Legal Crusade for Kodava Autonomy: A Fight for Identity and Justice

For over half a decade, Dr. Subramanian Swamy—economist, politician, and constitutional scholar—has been a vocal champion of the Kodava people’s demand for geopolitical autonomy within Karnataka. Known for his unrelenting pursuit of justice through India’s legal system, Dr. Swamy has taken up the cause of the indigenous Codava community, whose distinct cultural identity and historical legacy have fueled a decades-long struggle for self-governance. His latest appearance in the Karnataka High Court on March 11, 2025, marks a significant chapter in this ongoing battle, reflecting both his tenacity and the complexities of federalism in India.

Roots of the Struggle: The Codava Identity

The Kodava people, native to the hilly region of Kodagu (Coorg) in Karnataka, trace their history as a distinct entity back to the pre-independence era. Until 1956, Coorg existed as a Part ‘C’ State under the Indian Constitution, with its own legislative council. The State Reorganization Act of that year merged Coorg into the larger state of Karnataka (then Vishala Mysore), a decision that many Codavas argue erased their unique political and cultural standing. Since then, the Codava National Council (CNC), led by figures like N. U. Nachappa Codava, has spearheaded a movement for autonomy, seeking constitutional recognition akin to that granted to regions under the Sixth Schedule, which provides for autonomous councils in India’s Northeast and beyond.

Dr. Swamy’s involvement stems from a shared conviction that the Codavas’ aspirations have been unjustly sidelined. Dr. Swamy’s advocacy is rooted in his broader vision of protecting India’s diverse sub-identities within a federal framework. His engagement with the cause began gaining prominence in 2017, when he attended the 27th Codava National Day in Madikeri, promising to secure autonomy for Kodagu while keeping it part of Karnataka. “Smaller states are better governed,” he declared, citing examples like Telangana and Uttarakhand, though he emphasized autonomy over separation.

The Legal Front Opens: PILs and Promises

Dr. Swamy’s legal fight took concrete shape in 2023, when he filed a Public Interest Litigation (PIL) in the Karnataka High Court, titled DR SUBRAMANIAN SWAMY vs STATE OF KARNATAKA & OTHERS (Writ Petition 7769/2023). The PIL sought the formation of a commission to examine the CNC’s demand for Codava autonomy, arguing that the community’s history and culture warranted constitutional protection. On April 17, 2023, a division bench led by Chief Justice Prasanna B. Varale issued notices to the Karnataka and Union governments, signaling the court’s willingness to engage with the issue.

The 2023 PIL built on Dr. Swamy’s earlier assurances. In 2018, he reportedly discussed the idea of a Codava Autonomous Region with then-BJP leader H. N. Ananth Kumar in the presence of Amit Shah and Rajnath Singh. In 2019, he wrote to Karnataka Chief Minister B. S. Yediyurappa, urging action on the demand. These political overtures, however, yielded little progress, prompting Dr. Swamy to turn to the judiciary—a familiar arena where he has challenged everything from corruption to citizenship laws.

Latest Developments: March 11, 2025 Hearing

The most recent milestone in this saga unfolded on March 11, 2025, when Dr. Swamy appeared before the Karnataka High Court in Bengaluru as a party-in-person for the PIL titled “WP on Codavaland Geo-Political Autonomy.” The hearing, presided over by Chief Justice N. V. Anjaria and Justice M. I. Arun, saw Swamy request that the case be listed for further proceedings, noting that pleadings from most parties—including the Union Ministry of Home Affairs, the Union Ministry of Law, and the State of Karnataka—were complete. The court acceded, scheduling additional hearings, though no specific date has been publicly confirmed as of March 12, 2025.

Supported by a legal team including Kieran Narayan, Satya Sabharwal, and others, Dr. Swamy’s appearance was bolstered by the presence of CNC chairman N. U. Nachappa Codava and members of the Virat Hindustan Sangham (VHS), a nationalist organization aligned with his efforts. The courtroom scene underscored the grassroots support for the cause, with Codava community members like Rekha Nachappa and Pattamada Kusha in attendance, alongside VHS figures like Jagdish Shetty.

The PIL seeks a constitutional framework for Codava autonomy, potentially under the Sixth Schedule, which currently governs autonomous councils in Assam, Meghalaya, and Ladakh, among others. Dr. Swamy has argued that Kodagu’s historical status as a separate state and its ethno-cultural distinctiveness justify such a measure. The case’s progression hinges on whether the court will direct the establishment of a commission—a step Dr. Swamy insists should operate under judicial oversight.

Looking Ahead: A Test of Will and Law

As of March 12, 2025, the Karnataka High Court case remains a live wire. The next hearings will likely test the legal merits of Dr. Swamy’s arguments and the willingness of both state and central governments to engage with the Codava demand. For now, the Codava people wait, their hopes pinned on a courtroom battle led by an unlikely yet formidable ally.