Netflix’s documentary ‘Bad Boy Billionaires’ related the lives and scandals of Vijay Mallya, Nirav Modi, and Subrata Roy. All three businessmen had political contacts or illegal means of accessing thousands of crores of bank finance. Just imagine what would have happened if Mallya, Modi, and Roy had been allowed to own banks. They would have got their self-owned banks to lend not thousands but lakhs of crores to their own dud and crooked businesses, concentrating ever more political and financial power in a few dubious hands. Ultimately those banks and businesses would have gone bust, millions of depositors would have faced the loss of their life savings, and so the government would have spent lakhs of crores of taxpayers’ money to rescue them.
Outrageous? Of course. Yet this is exactly what will be made possible by the ridiculous recommendations of a committee of the Reserve Bank of India to allow large industrial houses to own banks, reversing the policy of decades. There is an inherent conflict of interest between lenders and borrowers. Lenders want to ensure their loans are legitimate, secure, and safe. Borrowers seek loans by fair means or foul. A borrower who owns a bank can play around with the savings of millions of depositors. To prevent that conflict of interest, industrialists and bankers must remain apart.
This story is from the November 29, 2020 edition of The Times of India Mumbai.
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This story is from the November 29, 2020 edition of The Times of India Mumbai.
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