India’s economic and credit slowdown is revealing the strengths and weaknesses of its banking sector. Roiled by unprecedented frauds and surging bad debt, the nation’s state-run banks have returned the least to investors this year, Bloomberg News reported. However, investors’ belief in the potential of Asia’s No. 3 economy shows in the fact that its newest lenders offer the best returns, and a clutch of private Indian banks are among the world’s most expensive.

Prime Minister Narendra Modi completes four years in office on May 26. He’s used the time to give India its biggest tax reform, overhauled a century-old bankruptcy law, revived stalled projects and got the World Bank to say Asia’s No. 3 economy is a much better place to do business. Still, all’s not well with the economy, Bloomberg News reported. Once-trusted state-owned banks are facing allegations of fraud, their soured-debt pile is larger than ever, investors are dumping Indian stocks and bonds amid a stronger dollar and U.S. Treasury yields.

State Bank of India, the country’s largest lender by assets, joined its private peers in shrugging off losses as investors believe the lenders have finally got a handle on bad loans, Bloomberg News reported. SBI’s shares surged to a six-week high after it reported a record loss on Tuesday, weighed down by a doubling in provisions for soured debt. A similar contrarian market reaction was seen after No. 2 private lender ICICI Bank Ltd. and smaller rival Axis Bank Ltd. reported poorer-than-expected earnings.

At least 30 companies of the region are undergoing insolvency proceedings filed by banks before the National Company Law Tribunal (NCLT), Chandigarh, since the enactment of Insolvency and Bankruptcy Code (IBC) last year, The Tribune reported. “These include Amtek Auto, SEL Manufacturing, James Hospitality, Arcee Ispat Udyog Ltd, Mor Farms (P) Ltd and Castex Technologies. The cases have been filed by the creditors, including Corporation Bank, SBI and PNB,” said sources. Amtek Auto has a liability of Rs 14,000 crore.

India’s Tata Steel Ltd said on Friday it had completed the acquisition of a 72.7 percent stake in Bhushan Steel Ltd, which was in bankruptcy court over unpaid loans, Reuters reported. As part of the deal, a unit of Tata Steel is paying 352.33 billion rupees ($5.18 billion) to Bhushan Steel’s creditor banks. It will also pay Bhushan Steel’s operational creditors, such as vendors, another 12 billion rupees over 12 months. The Tata Steel unit will raise a bridge loan of 165 billion rupees to help fund the acquisition, while Tata Steel is investing the remainder in the unit, Bamnipal Steel.

In a related story, Bloomberg Quint reported that state-owned Bank of India would be able to realise around Rs 1993 crore from the first successful resolution by the National Company Law Tribunal concerning Tata Steel and Bhushan Steel, an official said. The amount would not include haircuts, BoI Managing Director and Chief Executive Officer D Mohapatra said. The realisation of the amount would lead to non-performing asset reduction and increase profitability of the bank, he said. “The first successful NCLT resolution involving Tata Steel and Bhushan Steel will help in realise Rs 1,993 crore.

Reliance Communications said it was in advanced talks with Ericsson to resolve “commercial issues”, after two sources indicated it was currently uncertain if the firms’ discussions over dues would lead to an out-of-court settlement, Reuters reported. Earlier this week, India’s bankruptcy court admitted a plea by the Swedish telecom gearmaker seeking insolvency resolution against debt-laden Reliance Communications (RCom) over unpaid service dues, potentially derailing the company’s plans to sell assets to larger rival Reliance Jio.

The Supreme Court on Wednesday stayed liquidation proceedings against beleaguered developer Jaypee Infratech Ltd., keeping homebuyers’ hopes alive of getting their properties, Bloomberg Quint reported. The apex court asked for status quo to continue in the insolvency resolution till june 15. Till this date, resolution professional Anuj Jain will continue to manage the company’s affairs. Within this timeframe, Jaiprakash Associates Ltd, the promoterfor Jaypee Infratech has been asked to deposit Rs 1,000 crore as a security against the claims of home buyers.

A member of the Insolvency and Bankruptcy Board of India (IBBI) said the current time limit to resolve insolvency cases was more than adequate, The Hindu reported. This assumes significance in light of demands for more time to resolve cases filed for bankruptcy. Currently, after a case is admitted in the National Company Law Tribunal, it has to be resolved within 180 days, failing which the company goes into liquidation. In exceptional cases, the NCLT may allow another 90 days for resolution.

Russia’s VTB Capital-led Numetal Mauritius Pvt Ltd. today told the company law appellate tribunal that it has offered over Rs 37,000 crore for Essar Steel Ltd. in the second round of bidding, Bloomberg Quint reported. The second round should be opened and the highest bidder selected from it, Numetal told the National Company Law Appellate Tribunal. ArcelorMittal, the only other bidder to have put in a bid for Essar Steel in the first round in February, however, opposed the opening of the second round of bids and sought only the first round of bids to be considered.