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Canara Bank recovers ₹303 crore from Rajesh Exports default via DRT

The recovery required no fresh P&L hit, as the bank had already fully provisioned the exposure. It signals an escalation in Indian lenders' debt recovery tactics.

₹303 CrRecovery from Rajesh Exports default

Banking1 min read

➤This isn't just a lucky break; it is the result of a calculated and aggressive legal strategy. Here is why this recovery is a major signal to the market:
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Already fully provisioned in prior periodsRecovery status

Canara Bank has recovered ₹303 crore from Rajesh Exports following a loan default tied to unpaid letters of credit. Under CEO Brajesh Kumar Singh, the bank had already fully provided for this exposure in prior financial periods, meaning the recovery translates directly to relief on the balance sheet without impacting current profitability.

Rather than writing off the remaining balance, Canara Bank is aggressively pursuing recovery through the Debt Recovery Tribunal (DRT). The bank expects to recover additional funds directly from deposits that Rajesh Exports holds with the tribunal—a tactical move that shifts pressure onto the defaulter's own liquidity.

The default occurs against a backdrop of severe regulatory scrutiny. Rajesh Exports is already facing a SEBI probe over alleged revenue misrepresentation, compounding the lender's risk exposure and justifying the assertive recovery stance.

The Canara Bank action reflects a broader shift in Indian banking strategy. Lenders are moving from defensive postures on bad loans—tolerating write-offs and prolonged court battles—to active, tribunal-backed recovery efforts designed to maximize cash recovery and deter future willful defaults.

Why it matters

For DSAs and loan agents, this case underscores the rising cost of defaults in India's credit chain. When banks deploy DRT muscle and freeze deposits, borrowers face immediate liquidity stress. This raises the stakes for connector verification and borrower quality assessment at origination, since recovery friction now carries real operational consequences.

Lenders are signaling that aggressive tribunal action is now routine practice, not exception. For distribution partners, this means loan documentation quality and borrower financial discipline matter more than ever—DRT recoveries take time and capital, but they are being pursued. Borrowers cannot assume tolerance on defaults.

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Finsamudra DeskNewsroom · 10 Jun 2026, 1:00 pm IST
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