On Wednesday, the stock market witnessed a startling development involving Bank of Baroda. The borrower from whom the bank is trying to recover a debt of ₹2,800 crore has turned around and filed a massive lawsuit against the bank, demanding damages of approximately $15 billion. This unprecedented legal action caused an immediate ripple effect in the market, leading to a 3% drop in the bank’s share price. The case revolves around BR Shetty, founder of NMC Healthcare.
Massive Lawsuit Filed by Borrower
The situation took an unusual turn as Bank of Baroda has been persistently trying to recover dues from BR Shetty, totaling around ₹2,800 crore. Legal proceedings have been ongoing across India and the UAE, with the bank securing multiple court orders to claim its money. However, Shetty has now filed a lawsuit in the Bombay High Court seeking compensation of $15 billion (roughly ₹1.44 lakh crore) against the bank and 25 others, igniting significant concerns in the financial markets.
Shetty alleges that bank officials were involved in facilitating fake transactions within his companies and ignored warnings related to money laundering. He further claims that loans were sanctioned using forged signatures. In his petition, Shetty demands $5 billion as direct damages, another $5 billion for business losses, and an additional $5 billion to compensate for damage to his reputation. He has also sought an annual interest rate of 18% on the claimed amount.
Bank Denies Allegations and Plans Legal Response
In response to the lawsuit, Bank of Baroda stated it has not yet received any official notice from the court. The bank assured that it will vigorously contest the allegations once served. It also recalled a similar lawsuit filed by Shetty in New York, which was dismissed in July 2024. Furthermore, the Karnataka High Court had barred Shetty from selling his assets in 2021, following which he filed for bankruptcy himself.
The news sent shockwaves through investors, with the bank’s share price falling to ₹231.30 during early trading from Tuesday’s close of ₹238.43. Since the start of 2026, the bank’s shares have already declined by nearly 22.7%. Interestingly, the case’s claim surpasses Bank of Baroda’s entire market valuation, which stands close to ₹1.2 lakh crore.
This dispute is linked to earlier conflicts involving the bank and the NMC group. In July 2026, Bank of Baroda had paid $600 million (around ₹5,700 crore) to resolve issues related to NMC. The bank claimed this settlement ended cases pending at the Abu Dhabi court. However, Shetty asserts that he was not part of that agreement, and his rightful claims remain unresolved, thus warranting compensation.
The evolving situation highlights the complexity surrounding Bank of Baroda’s efforts to recover its dues amid allegations of misconduct and fraud. The market is closely watching how these legal battles will unfold and what impact they will have on the bank’s financial health and reputation.
BR Shetty’s legal offensive has put the spotlight back on a troubled financial relationship with Bank of Baroda, raising serious questions about governance, accountability, and risk management in high-value corporate lending cases.
