WITH EYES WIDE OPEN
D. N. Bezboruah
Long ago, as a student, I remember reading an essay titled ‘Worship of the Wealthy’. Today, it amuses me to see the extent of such adulation in the world’s largest democracy. This is not to suggest that the West is free from this itch to kow-tow to the wealthy or show them the kind of deference quite uncalled for at least in democratic dispensations where people believe they have ‘liberty, equality and fraternity’. [Few people stop to think of how empty such slogans have become in a world where the ability to pretend has become the most prized virtue.] Today, I propose to devote some time and space to the totally uncalled for and amusing pastime of showing deference to the wealthy not because they have certain virtues apart from their impressive material possessions, but merely because they are rolling in the stuff. What is indeed significant is that not only individuals but governments too are keen to curry favour with the very rich by granting them concessions and financial reliefs that they are not really entitled to.
There is hardly anyone who has not noticed how several wealthy individuals from all over the world are shown to be deep in debt even when the same authorities who list their major debts do not take the pains to list also their assets so that people can judge for themselves whether their purported indebtedness is illusory given the extent of their real financial worth. Something that has never ceased to befuddle me is the trend that impels large banks to advance prodigious loans to individuals already owing thousands of crores of rupees to different financial institutions. In other words, here is a situation that seems to perversely impel major bankers to lend more money to an individual who has earned notoriety through his bad debts. There are several such cases, but the case of Vijay Mallya sticks out like a sore thumb because of the way banks chose to throw good money after bad just to please an important individual very much in debt, but one who has managed to run away from any punitive action by removing himself to Britain.
When the going was good, Vijay Mallya was able to borrow about Rs 9,000 crore from a consortium of 13 Indian banks of which the State Bank of India was the leader. The loan was given to the now-defunct Kingfisher Airlines owned by Vijay Mallya. It was not as though Vijay Mallya’s reputation as a bad borrower was not known to the body of bankers who chose to overlook his past and give him yet another loan for a commercial venture that failed. Neither was it unknown to the leading bankers that Kingfisher Airlines was owned by Vijay Mallya. So what are the obvious conclusions to be drawn from a huge financial transaction approved by bankers to benefit a known bad borrower? Are any of the bankers now going to pretend that Vijay Mallya’s ownership of Kingfisher Airlines did not make a difference because it was a new company? Does this kind of recklessness about lending large sums of money (regardless of ultimate consequences) to any prominent individual constitute part of the training of these individuals as bankers? No one would be inclined to fall for such hogwash. The obvious conclusion to be drawn for such unprofessional conduct is that there had to be very tempting personal benefits for the bankers concerned to take such perverse decisions. The ordinary borrower from any bank knows how difficult bankers can be even about small loans. Is anyone prepared to believe that there are separate rules for ‘special’ reckless borrowers whose new company (for which the huge loan was taken) packed up in a matter of months without any visible efforts being made to keep the company functioning? Has there been any visible action from any of the members of the consortium of 13 banks that advanced Vijay Mallya a loan of Rs 9,000 crore? There is practically nothing about it in the newspapers or on television. Even more astounding is the bank loan of around Rs 12,000 crore to Nirav Mody and his uncle. What is not very astonishing is that both Vijay Mallya and Nirav Modi should be abroad with very slim chances of the government of India being able to bring them back to India to face charges and trials.
Huge loans are readily grabbed because they are so readily given to just some blue-eyed boys and not to others. But the government has a right to ask such accommodative bankers the elementary question about the collaterals furnished for such fantastic loans. The government must be satisfied that such big loans are not given from public money held in trust with banks without the requisite securities. And now that the matter has become public, people have a right to know what kind of collaterals or securities were pledged for securing loans of Rs 9,000 crore and Rs 12,000 crore. The government cannot go on pretending that such matters are confidential and cannot be discussed. In fact, it would be a sensible course of action for someone to demand this information and to take the bankers concerned to court for declining to furnish the information.
According to Arijit Basu, Managing Director of State Bank of India (SBI), Indian banks are working very closely with various agencies including some in Britain, to recover the maximum out of the assets owned by Vijay Mallya after a British court allowed them to search and seize properties of Mallya. This is what Basu had to say on Friday: “We have been able to come this far because of efforts made in a very coordinated manner by all agencies, including the government. We are very happy with the court order, and with this kind of order we have, we should be able to go after these assets.” The pertinent question is: How far have the banks been able to go in recovering the huge injudicious loans advanced to Vijay Mallya and Nirav Modi? Is the mild euphoria evinced by Basu not misplaced? So far, the consortium of banks is reported to have recovered about Rs 963 crore from the auction of Mallya’s Indian assets. This is just about 10.7 per cent of his borrowing without calculating interest. There can be no room for euphoria over the recovery of less than 11 per cent of the loan advanced to him.
The British court order permits the UK High Court Enforcement Officer to enter Vijay Mallya’s properties in Hertfordshire near London. The court order also permits the officer and his agents entry to Ladywalk and Bramble Lodge in Tewin, Welwyn, where Mallya is currently based. The order affords the Indian banks to use the option to use the order as one of the means to recover the estimated funds of around £ 1.145 billion. There should be absolutely no hesitation is using the opportunity that has arisen to sell these assets of Mallya in Britain in order to recover as much of the loan of Rs 9,000 crore as is possible.
What Arijit Basu talks about as a “landmark order” will be such an order only if the government of India and the consortium of banks make the most of the order to sell as much of Mallya’s assets in Britain to recover the undeserved loan of Rs 9,000 crore that he had received from the consortium of Indian banks. Having done this, Indian bankers must henceforth ensure that they adhere to rules and norms of their own making and not create unholy situations arising from loans, and that they refrain from making any preposterous special cases for their blue-eyed individuals. The government of India must eschew its tongue-clicking over well-known cases of rule-breaking for personal gain and devise more efficient ways of (a) getting law-breaking Indians in other countries back to India for trial much more expeditiously; (b) ensuring that law-breaking Indians are unable to seek asylum successfully in other countries; and (c) that economic offences are minimized due to more efficient control systems.