Mobility paves Samsung’s silver path
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
Depositors of Punjab and Maharashtra Co-operative Bank protest outside the RBI headquarters in Mumbai, demanding the return of their entire money and revival of the bank. Photo: Vivek Bendre/The Hindu
PM Modi has dreams of India becoming a $5-trillion economy. He needs to wake up from that dream and see the shoddy way individual investors are treated, and to correct that treatment if he truly believes in his dream. The system does not protect investors, au contraire — it protects the scamsters and the fraudsters. It is they who corrupt the investigative, prosecutorial and judicial systems and escape with the life-savings of the investors.
Does the system have empathy for, say, the depositors of PMC co-operative bank who have lost their life-savings only because the bank management was complicit in a fraud, and lent 74 per cent of its funds to one single group, HDIL? A heartbreaking story in Mumbai Mirror spoke of three single women who often go to bed hungry because of losing money in this fraud. And the perpetrators of the fraud own bungalows in hill stations to which they get a pass to go to, to holiday during a pandemic while their victims go hungry to bed.
Does anyone in government have the semblance of a conscience?
It’s difficult to imagine, going by the analysis of the Association for Democratic Reforms(ADR) that 44 per cent of the newly-elected Rajya Sabha members have criminal cases filed against them, including for heinous crimes such as murder, rape, dacoity and theft. So long as the cases remain pending, they can continue being MPs. This explains the reluctance of our politicians to reform the judiciary and speed up the system.
It also explains why India, which has a lot of attractive features (great demographic profile, English-speaking and low-cost labour, a democratic set up, etc) does not still attract a lot of direct foreign investment. PMC is one of many such scandals where individual investors have been defrauded and nothing has been done to protect them.
Will PM Modi do something for their plight?
Now consider another travesty, in YES Bank. The bank was, during the past few years of stewardship of the founder, Rana Kapoor, irresponsibly lending to companies unable to borrow elsewhere, in return, it is alleged, for a quid pro quo. Over these years of profligate lending, Rana Kapoor diluted his stake in the bank, knowing that it would fall into trouble. It did get into trouble, and was bailed out by SBI and other banks. Deposits were frozen, holders of the Perpetual Bonds issued by YES Bank lost 100 per cent of their invested money, and last week, the bank stated that it would not pay interest on its 10.25 per cent Upper Tier 2 bonds. Now deposits provide about 90 per cent of a bank’s funds; shareholders provide around 10 per cent.
So, what is happening in YES Bank? Withdrawals by deposit holders are subject to limits. But RBI has extended a ₹50,000-crore credit line by three months and the bank has also been permitted to make a ₹15,000-crore follow-on public offer! This is bizarre. A company/bank, which is in financial trouble, is being permitted to raise more money from the public. This is not happening in India alone. In the US, a bankruptcy court permitted Hertz, the car rental company, to make a public offer of shares.
In these cases, the system seizes assets and sometimes liquidates them. That is logical.
But what is not logical is that the sale proceeds are not distributed to the victims. In the case of NSEL, for example, sale proceeds of defaulter assets are lying with the Enforcement Directorate. Guess why. Because of objections by the fraudster, who wants to verify the bona fides of investors!
Sorry, Mr Modi, but if such crimes against individual investors are not tackled, then the dreams of India becoming a $5-trillion economy will remain just that — dreams.
The writer is India Head — Finance, Asia/Haymarket. The views are personal.
The Korean giant’s early bet on mobile phones helped it hit the $10-bn mark in India, but in its 25th year it ...
Antrix should adopt a different tactic than merely fighting over jurisdiction: Experts
Invest in relationships, enterprise, behaviour, effort and learning
From different types of osmoses to new membranes, researchers have come up with ways of drawing water
Only half the Sensex stocks have bettered the index’s return in the last 10,000-point journey
High valuation and stiff competition from larger players are a dampener
Investors with a short-term perspective can buy The New India Assurance Company (NIACL) stock at current ...
₹1490 • HDFC Bank S1S2R1R2COMMENT 1475146015051520 Fresh short positions are recommended with a stiff ...
What makes the new crop of young Indian cricketers such game-changing winners? Over and above their talent, ...
Regina King’s film ‘One Night in Miami’ turns the spotlight on four young men’s often conflicting ideas of ...
Each new year millions of people around the world resolve to change their lives for the better. These ...
In these isolated times when people yearn for a slice of the familiar, amateur and professional chefs are ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor