The Bhushan Steel Scam: A Cautionary Tale of Corporate Greed and Collapse

Few names once rang as confidently in the vast corridors of India’s corporate landscape as Bhushan Steel Limited (BSL). But under the glowing facade of industrial progress and growth, lies one of India’s most notorious corporate frauds—the BSL scam, which is steeped in financial crime, negligence of governance, and complex legislation.

The Rise: From Steel Dreams to Industry Giant

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Founded in 1987, Bhushan Steel scaled heights to position itself amongst India’s leading auto-grade steel manufacturers with an annual capacity of 5.6 million tonnes. With its massive plants in Uttar Pradesh, Maharashtra and Odisha, it drew billions in bank loans to fund its growth. But behind the scenes, something dark was at work.

By 2018, Bhushan Steel had defaulted on a massive pile of debt. What initially looked like a business failure due to market conditions was soon unmasked as something far more disturbing.

Unveiling the Scam

A. Fraudulent Financial Practices

In one of the biggest financial fraud cases in India’s history, investigative agencies Enforcement Directorate (ED) and the Serious Fraud Investigation Office (SFIO) revealed that BSL's promoters, notably Neeraj Singal, orchestrated a complex web of financial deceit. Key findings include:

• Shell Companies: Over 150 shell entities were established to divert funds from BSL and Bhushan Energy.

  
  

• Rotated Funds: Funds were systematically rotated among these entities, creating a facade of legitimate transactions while siphoning off capital.

  
  

• Fabricated Documents: Forged documents and false representations were presented to banks to secure loans and discount letters of credit.

B. Scale of the Fraud

The magnitude of the fraud is staggering:

• Bank Loan Fraud: A staggering sum of ₹56,000 crore was siphoned off banks in one of India's biggest banking scams.

  
  

• Financial Institutions’ Loss: The ED says the Singals caused ₹11,446 crore loss to financial institutions.

Where Did the Money Go?

Instead of investing in infrastructure or manufacturing, the money was used for:

• Buying properties in states like Maharashtra, Haryana, and Assam

• Funding personal investments

• Circulating fake invoices to show business growth

• Repaying older loans to maintain an illusion of credibility

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One shocking detail emerged: loans taken for machinery were shown on paper, but no machines were ever bought. Fake vendors, false invoices, and fraudulent transactions propped up Bhushan Steel’s books.

The Investigations, Arrests, and Reforms

The Enforcement Directorate (ED) and Serious Fraud Investigation Office (SFIO) launched multiple probes.

• Neeraj Singal was arrested in 2023 and is currently in judicial custody.

  
  

• In 2024, the ED provisionally attached ₹429 crore worth of assets, including luxury apartments, office properties, and expensive vehicles.

  
  

• More than five senior executives of Bhushan Steel were also arrested.

  
  

• After 16 months in custody, Neeraj Singal was granted bail by the Supreme Court in September 2024 and mandated that Singal surrender his passport and refrain from leaving India without permission 

A prosecution complaint was filed, and the court took cognisance in November 2023. Investigations are still ongoing into other possible conspirators and financial conduits.

Corporate Insolvency and Acquisitions

A. Tata Steel's Acquisition

In 2018, Tata Steel purchased BSL through the Corporate Insolvency Resolution Process (CIRP) framework for achieving a recovery value of approximately ₹35,200 crore, with revival potential intentions marked as distressed assets.

B. JSW Steel and Bhushan Power & Steel

Following this purchase, JSW Steel came under legal scrutiny after acquiring Bhushan Power & Steel (BPSL) , another family business of Singals, paying ₹19,350 crore in 2019. In May 2025, the Supreme Court overturned the acquisition, ordering BPSL's liquidation, citing a lack of due process.

Conclusion

The unforgivable misgovernance of corporations alongside extreme weakness in existing structures is the lesson considering the Bhushan Steel scam. Without sufficient legal rules, controls, complete and honest documentation regarding business processes, and proper corporate guidelines, misgovernance could lead to substantial damage to Indian financial institutions and the trust of investors.