Tuesday, June 6, 2023
HomeOpinionIs banking becoming a bad word? - Part-1

Is banking becoming a bad word? – Part-1

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“The name you can bank upon!” How relevant is the proud slogan carried by the state-run Punjab National Bank, in the aftermath of the scam? Lend, loot, borrow and bolt – all substantiates the ‘great escape’ of Nirav Modi and Meher Choksi with Rs 11,400 cr in their kitty, sans the regulators’ knowledge (?), confirming the elaborate swindle in connivance with rogue bank officials by exploiting the loopholes that existed for years. The bank has issued Letter of Undertakings (LOUs) like IPL cricket complimentary passes to the ‘gemsters’.

If you miss an EMI, it is your problem. If you owe a few thousands, it is the bank’s problem. If you are a tycoon, it is the nation’s problem. That’s aggressively the situation India is in, after the likes of PNB had extended injudicious and fraudulent credit facilities to the likes of Nirav Modi, the corrupt pattern providing the latter a happier hunting ground.

The fat cats have the upper hand in negotiations with the lenders because they know the tradition of red-tape and primitive legal systems make it tough to seize the assets of defaulters.

The lenders are, by their conduct, sending wrong messages that the government would never “fail” them, despite their despicable practices and not mending their errant ways. If two or three bank officials can circumvent the system so easily for so long, then there is no guarantee that such perfidies have not crept in other banks.

The coincidence is that whenever such frauds are declared, culprits are already in foreign lands, distinctly showing that governance has gone too pathetic.  Nationalisation of losses and privatisation of profits are going on and on, but who cares?

Our money, their escape bonanza 

Pressures and concessions have become normal part of banking. When small borrower defaults, punishment by hired goons is swift and savage. Few loan sharks were ever prosecuted, fewer still convicted.

What is the mechanism of whistleblowing in this country? There are enough honest, dissenting voices. One wonders why the PMO didn’t act despite a written complaint received on July 26, 2016. Why our financial intelligence totally failed to prevent such criminals from fleeing the country? Vijay Mallya showed the way, the consistency showing a pattern.

Stop political pyro-techniques

Our netas play the blame game. Yes, that’s their job description. Some TV channels are so noisy that the respective political representatives only trade charges. If the national parties mean national interest, talk substance beyond BJP vs Congress.

The scam played out commensurate with three years of the Congress-led UPA regime (2011-14) and three years of BJP-led NDA rule (2014-17). One party gives money, the other let him go out of the country. No Mallya lessons learnt.  Undoubtedly, the corporate-political nexus is durable and decisive.

Banking impropriety

There is a great amount of indiscretion in the functional operation of the banks which could lead to several such financial disasters. When gargantuan amount is involved, it should have been handled by very senior officials at many levels after rigid verification.

Among criteria for lending should be the standards of public conduct of our borrowers. If a factory is to be financed, will it pollute? When a new product is to be developed, is it safe? How trustful is a company’s advertising? It’s true these questions are not always asked, or acted on, at present.

The PNB credulously wants the nation to believe that the $1.77b scam was committed by some small-time managers. It is perplexing that the abetting bank officials could conceal their misdeeds simply by not recording the transactions, confirming serious rot in the Indian banking system.

Is the early warning signal system, with all the apparatus of returns and reports, at work at all? How come sharp practice goes on till it is too late to do anything except cover it up? What about the suppression of findings of internal investigations?

A soldier cannot decide morality. He operates under orders. The alternative is chaos. Is it that bank officials thus positioned?

A data shared in Lok Sabha revealed that a total of 12,778 cases of fraud were reported in all scheduled commercial banks between 2014-15 and 2016-17.  The PSU banks alone reported 8,622 cases. The involvement of staff was reported in more than 13pc of the fraud cases. Interestingly, no gun, knife, weapon or horses needed to commit fraud.

(This is the first part of the article and the remaining portion will continue tomorrow)

(The views expressed by the author in the article are his/her own.)

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