Is Chhota Modi Drama A Script For De-Nationalisation Of Banks?

Raman Swamy

Almost on cue, the industry chambers have raised the demand for de-nationalization of banks.  The chief economic advisor has, almost conversationally, supported the idea by saying that perhaps the time has come to at least consider the privatization option. 

Not unexpectedly, the bank unions have reacted angrily - “What a ridiculous solution to a crisis that has been caused because private companies have failed to repay their loans!”

It is as if everyone is reading from a pre-prepared script and playing out their roles.   First came the big breaking news - that a high-flying jeweler had defrauded a public-sector bank. 

All the key points of the sensational story were made available to the media with readymade facts and figures.  Name of defaulter – Nirav Modi.  Amount of default – Rs. 11400 crore.  Modus operandi – fake LoUs issued by Punjab National Bank used to borrow from other banks.   

Then came other juicy details, also with precise details of names and dates -  every member of the Nirav Modi family had left the country a month earlier, one by one, one day after another. 

It was too good to be true.  It was almost too specific, too pat in every detail to be believed.  Every TV channel was fed the same information at the same time.  There was no need for any investigative journalism.  The package of headline-making highlights and tidbits was as ready-to-use as two-minute noodles.

Acting on cue, every TV channel gave maximum Breaking News coverage to the ‘scam of the century’, breathlessly and dutifully unveiling all the information that had been gifted to them, repeating all the astronomical figures to create maximum shock-and-awe impact. 

To add political flavour to the bombshell news, the time span of the scandal was neatly divided between UPA era and NDA era, pre-2014 and post-2014.  Once again, it was almost too tailor-made to be true -- it allowed partisan anchors to indulge in high-pitched Congress-bashing to their heart’s delight, even while giving anti-Modi panelists some sharp pellets to hurl at the incumbent government. 

To keep the fire of scandal and controversy raging, the government agencies unleashed a series of cross-country raids and searches and arrests.  Tax sleuths and Enforcement Directorate investigators barged into glittering jewelry showrooms in big cities across the land, confiscating whatever diamonds and pearls they could lay their hands on, even as TV cameras were allowed to catch glimpses of the action from the streets outside.  

To keep the political angles alive, the big guns of the ruling party were fielded, right from the Ministers of Defence, Law and Human Resources down to humble party spokespersons whose main brief was to ensure that the decibel level remained at ear-splitting intensity.   The Congress, too, went on propaganda overdrive, with a barrage of allegations, accusations and demands for explanations, backed up by a volley of stinging statements and tweets.

Through all the sound and fury, froth and bubble, the Prime Minister himself maintained a strange and studied silence.  Even though photographs and videos of his close proximity to the prime culprits, Nirav Modi and Mehul Choksi, were freely bandied about, and in spite of the fact that his PMO was repeatedly accused of ignoring early warning signals, Narendra Modi kept himself aloof and above the chaos and confusion raging all around him, bringing the banking system into disrepute and turning the stock markets into a bucking bronco rodeo show.

Equally silent was the most vocal Minister in Team Modi. Despite the fact that bank frauds and income-tax investigations fall squarely within his jurisdiction as Finance Minister, the usually voluble Arun Jaitley observed a virtual maun vrat for three whole days before finally coming out with a uncharacteristically gentle truism - the auditors should have been more alert, he said, the top management should have been more diligent.  Don’t worry, he added, cheaters will be brought to book.

He then made a comment - "Public sector banks are given so much autonomy.  When so much authority is given to the managements, they are expected to utilize that authority effectively and in a right manner. The question is, have bank managements been found wanting? The answer seems to be:  Yes, they were". 

Whether this was just an innocent observation or a loaded comment is open to interpretation.   But the chambers of commerce have been quick to take the cue.  Both FICCI and Assocham have called for privatization of public sector banks. 

Bank employee’s unions have reacted with a sharp statement. C.H. Venkatachalam, General Secretary of All-India Bank Employees’ Association, said that if private banks are really efficient, why were so many banks closed down and merged with others in the past. Most of the private banks were merged with PSBs.

He added: “PSBs have become ‘Neelakanta Mahadev’ to swallow the ‘poison of failure’ of many private banks. It is funny that Assocham and FICCI are asking PSB to be privatised now.  The real delinquents and defaulters are the private companies, industrialists and corporate houses.  Should PSU banks be privatized and handed over to these very delinquents and defaulters?”

Feb 21, 2018

Raman Swamy

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