I have often wondered, isn’t the word ‘brazenness’ anathema to the dishonest? But this is exactly the word that was used by Siri Vinod Rai, the then CAG, during a lecture at the Harvard Kennedy School on the 2G spectrum scam. Why would any political party, before the elections, be brazenly involved in multiple scams and heap opprobrium on itself? The most plausible answer would be to lose the elections, isn’t it? But doesn’t that sound a bit ridiculous? Why contest an election only to lose? The answer to this probably lay in the activities of the past years which were likely to bear its bitter fruit in the near future – and the best way out of this mess is to stay out of power.
But how to stay out of power? Contest the elections, but field weak candidates everywhere to lose, play the charade, make a lot of noise, and happily lose and sit back.
What is the bitter fruit that was being avoided? It is the multiple loans given by banks to unscrupulous elements at the behest of the political class, which nearly brought the Indian banking system to its knees. I had often thought if it was possible for a powerful minister to call up a bank chairman and request him to grant loans to so and so, tweak the rules if possible, and oblige! But that is exactly what seems to have happened. The British judge hearing Vijay Mallya’s extradition case had made the observation that ‘it was blindingly obvious that rules were being broken by Indian banks which sanctioned some of the loans to the erstwhile Kingfisher Airlines’.
It is also blindingly obvious that someone quite powerful had either coerced or cajoled bank officers to grant loans – and this is all the more certain when a report by Narayanan Vaghul, a former State Bank of India officer, opined on why RK Talwar, the former iconic Chairman of the SBI was sacked through an amendment known as the ‘Talwar amendment’.
From the two anecdotes above, it is amply clear that political interference is behind the multi-crore loan defaults. For a loan to become a non performing asset (NPA) takes time – and when the time was getting nearer, and the bitter fruits were beginning to grow buds, the Congress quietly decided to lose the elections and let the BJP carry the can. After the initial euphoria of winning the elections, it must have come as a rude shock to the BJP that the banks were on the verge of collapsing and that something must be done to re-capitalise them.
It soon dawned on the BJP that Raghuram Rajan for all his qualifications, experience and no-nonsense approach was the wrong man for the job. There should be a lid on the whole banking mess – but instead, the RBI governor was going around asking the banks to set the balance sheets right. However, the balance sheets were too wrong to be set right.
All the bright minds in the BJP must have burnt their proverbial midnight oil and come up with the idea of “Jan Dhan” accounts, to get the people of India to deposit money in the banks, with the added incentive that anyone could open zero balance accounts. But the recent financial gain from these accounts was a paltry ₹6,000 crores, whereas the likes of Vijay Mallya to Mehul Choksi had swindled multiple times that. Jan Dhan was bound to fail because huge sums of money will always beg the question – where did it come from? Nobody in their right mind would bring a truckload of cash to deposit in the bank.
Let us assume that Mr X has made money from bribes, extortion, racketeering, drugs, etc. and has ₹200 crores stashed away at home. There is no way Mr X is going to deposit that money in any bank. Hundred bundles of ₹1,000 notes make ₹1 crore – and for ₹200 crores, it would be 200 multiplied by 100 times which would be 20,000 bundles of ₹1,000 notes.
No bank in its right mind is going to accept that amount of cash without asking questions. No matter, the government soon realised that this money will never see the light of day. The failure of banks is too hot a potato, and no political party will be able to get away from this mess.
So what was the next best thing to bank failures? It was demonetisation, and it happened, not because of corruption, terrorism or anything else, but because banks needed to be recapitalised – and the only way was to get the man on the street give up all that they had, and that is what happened.
This was a classic case of “who will bell the cat?” The Congress did not want to do it and it conveniently forced BJP into it. Isn’t it strange that the Vijay Mallya episode is repeating all over again? Only the names and the amount defrauded change but the script remains the same – borrow money, go abroad, disappear. How is it that these fraud cases have people sitting outside India? Obviously, someone has tipped them off – get out before things get too hot.