When an event like the pandemic happens it is possible that more “banks” and “nbfc” ask for bail out.
Society should ask “do we need these organisations and these professionals” – whom are we bailing out. For example, we see that in the long run the price we paid for keeping a few jobs alive – Idbi, Ifci, etc. is too high. A Few years ago when Idbi was a “financial institution” it did not have so many employees. It could have been easily shut down. Right from the 1980s (if not 70s) these organisations were notorious for poor lending. Ifci was the worst. Idbi was slightly better..but getting loans was not difficult at all. In Mumbai we all knew somebody who knew somebody who could make project reports ensuring that you got funded. Let us assume that when “instiutional lending” ceased, these companies had 1000 employees, and a balance sheet full of shit. They could have just offered VRS or asked these guys to report to office and read books. Or even better paid them 50% salary and asked them to stay at home. Instead we choose to make it “Idbi bank”. Recruited more, gave away more shit, and now we have a bank which has more “NP” than A. Perhaps it has employees too who are “NP” and not “A”. However, we shove all this under the carpet and ask LIC to bail it out.
We could have easily “helped” the depositors of “Yes bank” by reducing the interest rates to 5%, and repaying their deposits. Should we have shed tears for the “bankers”? well where were the tears for employees of Jet Airways, Kingfisher…and a plethora of other “employees” of many companies which have since closed.
Why are banks different? Well banks are not. Just bankers are. They have an amazing array of terminology to convince you that their depositors, vendors, highly paid employees, landlords (most branc premises are rented),….need a bailout. Of course with our money and opaque balance sheets. I am convinced that in Yes bank those investors (Jhunjhunwala, Damani, Chrysallis,…to name a few) who asked for a properly audited (due diligence done) balance sheet were kept out. Those who could be arm twisted, and didn’t care for their “not powerful” shareholders, parted with OUR MONEY to bail out the bankers. We, the people.
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