Finally some action!

Finally some action against the rich and mighty. Sounds almost like something for the medieval times against the Lords. But that it indeed how one feels on reading the news that at last we are seeing some definite action against the defaulter, willful or otherwise, Mr.Vijay Mallya.

Yesterday, SBI claimed stake to the 17,000 square feet Kingfisher House in a bid to recover not all but at least some of the money eaten away by Mallya. He owes some Rs.7000 crore to SBI and a consortium of banks and this Kingfisher house will fetch Rs.2000 crore. Small but nevertheless something is better than nothing.  This is probably a first because this is the first in recent times that a public sector bank is actually taking such a strong action against a well-known personality; something it does not think about even twice had me or you defaulted.

If you and me go to the bank and ask for a loan of Rs.10 crore, from PSU banks, what is the likelihood of getting it? Zero or maybe roughly 4-5% of the teeming 1 billion populations might be able to get. And these will be individuals who would be well connected and already rich. If they default? Well, the same connections help them get another loan or get the loan restructured. So basically, banks do not have the courage to bring such fraudsters to task as they fear trouble from these ‘connections’. So does it all, ultimately boil down to being well connected and you can get away with anything?

So why do we have these hypocrisy in banking? While a small individual, for a smaller loan, is punished hard and long, the bigger fraudsters, are not only allowed to default, but they are granted more loans despite a pathetic credit history. Forget arresting, their personal properties are not ever attached. And we cannot know the names of the defaulters because RBI has refused to divulge the names of the defaulters against whom no suits have been filed, citing secrecy clauses. And these corporate honchos have today burdened the entire banking system and made healthy banks into debt holes. Aren’t they economic terrorists’?