A shake-up at Standard Chartered could finally turn the screws on India's tycoons. The emerging market lender is slashing costs and shedding billions of dollars of risky assets. That puts Essar, one of India's most indebted conglomerates, on the spot.

StanChart is looking to offload some of its share of loans worth $3.5 billion made to the holding company of the steel-to-ports group backed by the billionaire Ruia brothers. It's an overdue warning that suppliers of cheap credit are becoming rare.

Among India's capital-starved local banks, Essar is viewed as too big to fail. Credit Suisse analysts reckon it has gross debt worth around 1 trillion rupees ($15.2 billion) and interest cover of less than one times. Those figures exclude borrowings at the privately held holding company, Essar Global, which may have risen after it took London-listed Essar Energy private last year.