VIJAY MALLYA,THE INADVERTENT BANKING CATALYST!

DID VIJAY MALLYA PLAY AN INADVERTENT CATALYST?

Warming Up:

As Capt.CG Gopinath has put it in his write up titled “King, not Kingfisher at Fault “‘ , “the Vijay Mallya saga continues to provide grist to our rumor mills, generating lively debates in drawing rooms, and TV studios across the country”.

According to him it was dipping into the coffers of the company by company promoters as well as family-controlled businesses—cross holding firms that is- that finally brought down the kingfisher and its high flying playboy head! He implies that this can happen ONLY in this country where the market regulators are not alert and passionate enough to stop such delinquency.

India taught Mallya what he needed to outwit her!

It’s India–and lifestyle in India alone– that primarily made Vijay Mallya’s desperate game both feasible and possible.

Vijay Mallya (Forget the games being played by the banks and government for the moment!)  has taught India a lesson that she won’t that easily forget unless she has amnesia but then ANYONE with mental keenness can  play the same  con game any day even now, given the Great Hypocrisy that you and I habitually call our daily life here.

Let me elucidate!

Hypocrisy begins at our birth with our parents preferring to opt for the day best suited to the kid in life. Bribery offering or exploitation with understanding goes along with almost everything from then on thru school admission time with the parent saying one thing to the baby and doing something totally different. Promises are glibly given in baskets but never kept or honoured.

Militants in one State clamor for aid from the Centre while plotting against it.

All of us tend to worship a Goddess Mother figure but then our behavior to our own women needs considerable refinement! Parents are furious in claiming that they love their kids but they manage only to spoil them. Setbacks are pushed under the rug and no lesson gets learnt from them.

All political groups—they remind you of the day’s catch in a fisherman’s basket– play their games to snatch the layman’s vote—and then turn indifferent to him. Pressure groups push their stooges into the parliament and trigger a ruckus there.

Humans need faith for internal homeostasis of course but then here many faiths play their specific games, keeping the devotees in a fantasy realm. Community service is often a disguised tool for religious conversion. Cow vigilantes kill to protect their notion that cows are their moms.

Elections come and the most misfits get elected thru money and muscle power. No candidate or minister in power ever swears “I shall live and die for India”, implying that he has chosen to be in the chair merely for its plum privileges.

Thus a win in elections can be managed using money or muscle or both as needed.

Rajya Sabha the Upper house of the parliament is the easier destination for a businessman since he can cultivate high-finance guys and gals there in plenty—persons having nothing much to do any more in their lives after their heyday except raise their hands to approve or display thumbs down to disapprove bills.

That destination is also entirely within reach if you have the needed business clout-say with an airline to boot!

When it comes to banks in India, the situation is again filled with hypocrisy of another kind. All bank managers are so taken up with calculating profit and loss on the amounts advanced and shortlisting the defaulters that they easily end up as fall guys in the face of business glamour.

And Vijay Mallya was a synonym for that kind of overpowering glamour.

Mallya, probably thru brainwaves or brainstorming with Diageo officials within closed doors, sensed early enough that India would take a long,  long time to get developed and that she is way too much embroiled and encumbered among manifold contentious and controversial issues. He understood-the clever guy he has always been—that Indian democracy was a bird with both its wings clipped—i.e. without its key blessings Referendum and Recall—and that it was squawking furiously as if to fly.

He decided to fly the coop and settled in the UK where he could have his fun till he would exit the world’s stage and also carry himself about as a gentleman on a sabbatical!

I am sure he must have started his cool headed business planning at least decade ago –i.e. before he became an RS member. So he stage managed the employees of Kingfisher Airlines and husbanded as much as he could –even through huge loans–before he could fly away to happier shores with all the money intact.

As far as cunning and crook mindset goes, he is certainly a role model that many more Indians can emulate without too much inconvenience. Nay, he can run a School for Teleportation!

But then Vijay Mallya is very much like many among us that want everything for themselves abut are absolutely unwilling to sacrifice anything at all too!

Mallya also was well informed about the actual lacunae in Indian banking scenario. Banks tended to fail owing to their own incompetence too. All banks had their share in the pains of digitization and some tended to flounder or take any corrective action months after an irregularity was detected.

Mallya approached only those banks to borrow from that were in the laggard category. They responded as expected by him rather too late for his sudden action of fleeing the nation, supposedly for all time to come.

The RBI, in a democratic mindset and with due processes, was rather too late to take any sensible action on these!

Naturally he –like so many among us living here in India today–exploited all these to gain his own ends!

And I don’t believe he had factored in the possibility of having to repay this amount.

Indian Banking-Pre-Mallya vs. Post-Mallya:

Indian banks, which tend to live within their own cozy cubicles and don’t bother to give the customer enough awareness about how to carry himself ahead of his immediate present into a golden future through investments, carry a huge burden of INR 150 billion on their heads but the RBI feels that replenishing their reserves would see that issue solved to everyone’s satisfaction!

(Isn’t this humongous burden a colossal loss of national revenue? Doesn’t it reveal in a crystal clear fashion the total ineptness and incompetence of our bank managers? Can replenishing the coffers of a bank that has lent money stupidly make up for the loss? NO!]

Says Sunita Natti in NIE,

Banks need to strengthen themselves first, be it achieving operational flexibility, streamlining recruitment, or building core capabilities. The NPA issue continues to be bothersome.

“Many Indian banks have failed in the past, forcing the Government to constitute a Central banking Enquiry Committee which has cited the following reasons for bank failures: in sufficient capital, poor liquidity of assets, combining non-banking with banking activities, irrational credit policies, and incompetent and inexperienced directors”

“Ironically some of these problems persist and until bankers consciously attend to these, the industry may run the risk of being fragmented” [NIE]

Mallya borrowed from and forgot to repay—“duped” is the precise term for such behavior– the SBI of >INR 6000 crores but the SBI is thumping its own chest on having become a leviathan in the banking world with more erstwhile associate banks in its bowels.

What the SBI—a 212 year old bank for your information– has never cared for is the fact that it has never taken real motherly interest in nurturing its customers and giving them awareness beyond its own fixed deposit offers. [SEBI reports, after a Nielsen survey it funded, that 95% families in this country never think beyond bank fixed deposits! Fewer than 10% families have any investment at all in MFs]

SBI can feel relieved to know that most banks in India are as tunnel-visioned as it has been in this respect.

Indian Banking Scenario: Version 2.0

Vijay Mallya— arch crook or cool headed business adventurer—played an inadvertent catalyst in the act of hoodwinking and hoaxing the banking institutions in this country and also helped change the too-fossilized, too-conventional and too risk-averse mindset of Indian bankers across the board for all time to come.

He taught them NEVER to lend anyone, irrespective of who or what he or she might be, a farthing UNLESS the person had proven creditworthiness according to CIBIL.

He taught them to insist on having assets as collateral security far in excess of the amount proposed to be advanced.

He jolted them into full wake fullness and made them aware of the competition for survival going on at the individual citizen level day and night outside their own glass doors and how to expect persons as loan applicants that are long habituated to defaulting on loans.

Post-Mallya all Indian banking institutions have become over cautious and ever more watchful than during those pre-Mallya days of heady excitement lest a loan applicant dupe them.

They have taken steps to double screen the creditworthiness of every applicant for a loan however trifling and also follow up on repayment of the advanced amount.

The insistence on having enough movable and immovable assets by way of collateral security has become strident. The loan beneficiary is also being warned in detail of the disastrous clauses in SARFAESI Act 2002 that would make the latter homeless in no time.

Post Mallya we hear a roar from all banks that lent him money on the collateral security of his glamour. They want their money back at the earliest! Steps are being taken to bring him to India for a legal trial –for breach of trust possibly—though the hoped for may take place many months afterwards.

Modi ministry is keen on this but the earlier UPA—now in Opposition! — wouldn’t have cared if it were in power today!

YES, India is changing by the hour minute and second and Vijay Mallya—weasel that he has always been– has done his bit in taking us towards that Sunny India!

It doesn’t really matter whether and when Vijay Mallya shall be brought back here to account for his lapses or relapses or shenanigans-I am not bothered on that count—but Indian Banking shall never be the same again.

Excellent!

We fools learned by actual bitter experience. Ouch!

Period.

Bye!

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