Loan waivers, government handouts, and politically driven decisions continue to trump economic sense in our country
A group of 17 Indian banks are trying to collect approximately u00e2u0082u00b99,000 crore in loans that liquor baron Vijay Mallya has allegedly taken to to gain stakes in around 40 companies across the world. Pic/AP
Criticising a bank is always a bad idea. For one, some of the most learned economists consistently fail to arrive at a consensus on how Indian banks ought to behave. The last couple of years alone saw two qualified governors put their hands up and leave the RBI for reasons that will probably never see the light of day. Then there's the secrecy surrounding almost everything banks do, from hidden fees to charges that ought not to make sense but are openly enforced nonetheless. Finally, there is jargon. When confronted with allegations, bankers respond with figures, clauses and legalese because that has long been the refuge of scoundrels in our never-ending bureaucratic nightmare.
How do banks get away with the things they do anyway? How do they give away crores of our money to villains who can be spotted a mile away, gleefully write off waivers and non-performing assets, then shamelessly beg the government for handouts to save themselves from their own mistakes? There was a whole lot of stuff swept under the carpet in 2018, which is easy when you have a government that does its best to distract you with non-issues. CEOs of private banks were named and shamed for handing out loans to family and friends. What happened to those men and women? What happened to the committees set up to examine their alleged crimes? How were they allowed to fade into the sunset with severance packages that would take most of us a lifetime to accumulate? And why was there no outcry given that the money being distributed belonged to the rest of us?
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Then there were the millionaires — diamond merchants, businessmen, airline owners and assorted shady characters who masquerade as respectable members of society simply by wearing branded clothing. For every absconding felon who managed to slip away with consummate ease, there must have been a hundred defaulters who weren't even identified. After all, co-operative banks have been operating with impunity for decades, safe in the knowledge that they can do whatever they like and wait for a century for their actions to be uncovered.
A report by the tax department in February 2018 estimated that state-run banks could take a hit of more than $3 billion from loans and corporate guarantees provided to diamond companies alone. By February this year, that amount will have been forgiven and forgotten. This boggles the mind, given the sheer number of Indians still living below the poverty line. It's amazing that no one stops to think about what $3 billion can do, simply because none of that money has been allocated to things
that matter.
Loan waivers are another pet peeve. Who decides to waive a loan? Will any of us ever get one? We arrive at banks with suitcases full of papers, mortgage our homes and property for small sums, drag friends to stand as guarantors, and deal with a barrage of reminders when a single EMI is delayed. How do people who owe crores manage to walk away without a penalty, let alone punishment? Who pays for these waivers, often conveniently handed out by governments on the eve of an election? If banks are reimbursed for taking on these loans, doesn't that money come from our taxes, and shouldn't we have a say on how they should be distributed? Shouldn't we get better roads, hospitals and basic amenities in exchange for the portions of our salary we hand over every month?
Even things that most international banks take for granted aren't enforced here, because our banks are too busy protecting their stationery at local branches to see the bigger picture. According to RBI data reported by the press, banks in India faced 1,30,000 reported cases of cyber fraud between 2008 and 2017. The losses amounted to an estimated R700 crore. When was the last time a bank admitted to a cyber attack anyway, given the potential loss of reputation and damage to its brand? How do we know what the facts and attendant figures are, given that we are wilfully kept in the dark? Who reimburses a bank for failure to protect its own assets and those of its customers? Your guesses are as good as mine. Banks have managed to get away with incompetence, lack of transparency and poor accountability for too long, because we place bankers on pedestals and congratulate them for doing nothing but playing with our money. What do bankers deserve accolades for anyway? How do they make our country better?
When he isn't ranting about all things Mumbai, Lindsay Pereira can be almost sweet. He tweets @lindsaypereira Send your feedback to mailbag@mid-day.com
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