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What Was He Doing?

The rapid build-up of the giant and unmanageable NPA crisis that India faces today has been gradually coming out in the open. Between 2006 to 2009 the aggregate loans by banks doubled from Rs.18 lac crores to about Rs.36 lac crores and then increased by yet another 50% to about Rs.54 lac crores by end 2013. By this time, bankers had exhausted their capital, their money was blocked in bad loans, they had no capacity to lend and were themselves headed to bankruptcy since their losses due to bad loans had actually eroded their entire capital. Bankers by now have seeped into the crime of careless and corrupt lending in cahoots with their political masters and in complicit with the fraudster borrowers.

At this stage bankers did the most obvious, that any wrongdoer would do viz. conceal their crime. In connivance with the auditors and the regulators, banks now manipulated their financial statements, to hide the frauds and NPAs created by them. They thus greened the bad loans, to show them as well and accounted for profits, which Raghuram Rajan the former RBI governor says were illusory. Every bank chairman has been guilty of this crime of window dressing the books of account of the bank to not show the imminent bankruptcy of the bank. The bankers were very consciously lying in their balance sheets, unwilling to accept the truth since that would have got them directly in trouble. It was on Rajan’s insistence that NPAs started getting declared and the true story started emerging very reluctantly. It was soon clear that a mega loot had taken place and that it was the biggest financial scandal to have hit India ever. The grim reality became evident when it was found that so blatant were the frauds, that banks would perhaps not recover their loans and would be forced to take haircuts of over 90%, getting to recover only 10% of the loans given.

It was soon evident that India had been hit by the catastrophe of telephone banking or influence banking where those with political connects were given huge loans, ignoring their own track record and history of being defaulters. The wolves had been given the responsibility to guard the hen houses. The most unviable projects and the most scammy promoters were sanctioned huge loans, well aware at the very inception that it will not be repaid.

That brings us to the most important issue. All these giant frauds and plunder took place during an era when India was headed by a PM, who was earlier its finance minister and RBI governor too, and is supposed to be an acclaimed economist. The question that he needs to answer is, was he not aware of the mega-crisis being incubated in India. With his credentials of beings a former RBI governor, that is most unlikely. So if he was aware of this mega-crisis in the making, why did he let this loot and plunder continue aware that it will play a havoc on the Indian economy and can deny growth to an entire generation. The question is what was he doing and how is he not equally guilty of this mega loot/crime?  

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