Indian Banks & Financial System

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SRajesh
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Re: Indian Banks & Financial System

Post by SRajesh »

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Ambar
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Re: Indian Banks & Financial System

Post by Ambar »

I cannot believe we are defending Vijay Mallya and calling him a "job creator" ! By that yardstick even Dawood Ibrahim is a entrepreneur and a job creator who presides over a multi-billion dollar enterprise that is into everything from real estate to drugs to international terrorism that employs thousands ! The crook Mallya was burning over 100 m USD on his F1 team every year while not paying his staff their salaries for months. He was a wilful defaulter and i see no problems in banks not agreeing to take a huge haircut when they knew Mallya's assets far exceeded his liabilities. It is wrong to assume he is bankrupt, guys like Mallya, Nirav Modi, Choksi etc know very well what they are doing and have millions stashed abroad to live a lavish life for the rest of their lives. His entire F1 team was irony in fast motion because the other co-sponsor and later co-owner was none other than Subrata Roy of Sahara group who acquired a 40% stake in Force India F1 for $100m USD.

It doesn't matter if a bank is lending for a 2-wheeler to a middleclass guy or lending billions to a rich guy to buy a fleet of jets, due diligence must be done. If they had taken every loan application on its merit and done the same level of due diligence then we wouldn't be in a situation where 12 to 14% of PSU loans are NPAs. We can kick this can as far down the road as possible but it will explode someday.
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Re: Indian Banks & Financial System

Post by Yagnasri »

With due respect to gurus here, have you really handled or knew personally about the accounts like Jet or Kingfisher to comment on them. Let me tell you the NPA is Videocon is many times than Jet or Kingfisher. The same is the case with Bhushan Steel. Did you hear news reports on them? Have you ever heard of the company called Bharat Shipyard? What is the NPA amount there?

Not all NPAs are due to criminal activities. Let us not consider every NPA is a crime..
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Re: Indian Banks & Financial System

Post by nachiket »

The business itself may not fail because of criminal behavior. The shady part comes in how the loans are given out. Lack of due diligence which may be intentional in determining whether these big companies or individuals actually qualify for the loans based on their actual financial state. They are approved because of the personal relationships between the client and the people who sign off on them.
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Re: Indian Banks & Financial System

Post by Ambar »

Yagnasri wrote:With due respect to gurus here, have you really handled or knew personally about the accounts like Jet or Kingfisher to comment on them. Let me tell you the NPA is Videocon is many times than Jet or Kingfisher. The same is the case with Bhushan Steel. Did you hear news reports on them? Have you ever heard of the company called Bharat Shipyard? What is the NPA amount there?

Not all NPAs are due to criminal activities. Let us not consider every NPA is a crime..
True, not all NPAs are due to criminal activities but in Indian banking most of the large and very large NPAs are due to willful defaulters on the borrowers side and criminal collusion or criminal negligence on the lenders side. As for Videocon, aren't the Kocchars in trouble because of Videocon's default ? Same with Bhushan Steel too, ED has been investigating the Singhals for massive fraud for years now . The reason with media's obsession with Vijay Mallya or Nirav Modi is because of their glitzy larger than life personalities. One curious observation is that when there is fraud then Punjab National Bank cannot be too far from it. Videocon ? PNB has exposure. NMC Health ? PNB has exposure. Bhushan Steel ? PNB has exposure. Kingfisher ? PNB has exposure. Nirav Modi ? PNB has exposure and it goes on..
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Re: Indian Banks & Financial System

Post by sankum »

Very few businessman are so honest that they will not indulge in misappropriation of company funds through money laundering if their companies are failing.
Forensic audit will show up any wrongdoing but it happens only when the company turns NPA.
Higher private education alone generates Rs 50000 Cr per year black money which is laundered and no regulatory action against these institutions.
A typical dental college for example generates Rs 10 Cr per revenue in white and Rs 5 Cr in black money per year while actual expenses is less than Rs 5 Cr and the profit of Rs 10 Cr in black is laundered per year through shell companies and investment in properties.
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Re: Indian Banks & Financial System

Post by kvraghav »

Since Yagnasri sir is here, just a question. Why are companies so averse to go to the capital market and raise money for capital spending there rather than costlier loans? IPO are virtually interest free. Is it because the promoters ownership starts getting diluted or the closer scrutiny market will do and get the company to the mat if they are cheating? Markets have more incentive to do due diligence properly than a bank employee.
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Re: Indian Banks & Financial System

Post by Yagnasri »

There is no single reason for not going to share market for all the funds. Any good company will have healthy mix of both. But the share capital also not actually free. Normally risk takers invest in shares with expectations of higher returns. Plus promoters naturally do not want to dilute their control on the company. You will not get investors in shares if the return is say 8 or 10% in the form of dividend and there is no share price appreciation.
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Re: Indian Banks & Financial System

Post by Yagnasri »

The new company act of 2013 of course provides for shares will different voting rights. So the loss of control may not be the sole reason now.
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Re: Indian Banks & Financial System

Post by Vivek K »

Ambar wrote:I cannot believe we are defending Vijay Mallya and calling him a "job creator" ! By that yardstick even Dawood Ibrahim is a entrepreneur and a job creator who presides over a multi-billion dollar enterprise that is into everything from real estate to drugs to international terrorism that employs thousands !
Wow! You go on exemplifying everything wrong with the Indian mind set and the reason for India's lack of industrial development. Mallya = Dawood in your brain :rotfl: Boss, nothing more to add here or help you understand. Your hatred is not allowing you to see reason.
The crook Mallya was burning over 100 m USD on his F1 team every year while not paying his staff their salaries for months. He was a wilful defaulter and i see no problems in banks not agreeing to take a huge haircut when they knew Mallya's assets far exceeded his liabilities. It is wrong to assume he is bankrupt, guys like Mallya, Nirav Modi, Choksi etc know very well what they are doing and have millions stashed abroad to live a lavish life for the rest of their lives. His entire F1 team was irony in fast motion because the other co-sponsor and later co-owner was none other than Subrata Roy of Sahara group who acquired a 40% stake in Force India F1 for $100m USD.
This is the Indian mindset and why we will never have an Elon Musk or a Richard Branson or others. The Indian belief - If I cannot be big, then at least let me pull others down.

I guess you need to learn there is a different definition of willful defaulter - Banks would describe such a person as being one that does not pay back loans. Salaries are paid by businesses. The promoter may have additional resources but a professionally run company is run as a profit and loss account by itself. It has to generate its own funds to pay for its expenses. If it runs out of funds to pay salaries it has to look for additional borrowings. Your logic seems to be that the Promoter must invest additional funds in the firm if it runs out of money, but if the promoter needs money - he/she cannot dip into company accounts. Well, both versions are wrong. In your case though, you seem to be suffering from jealousy of the lifestyles of the rich and famous and for that there is no logical solution.
It doesn't matter if a bank is lending for a 2-wheeler to a middleclass guy or lending billions to a rich guy to buy a fleet of jets, due diligence must be done. If they had taken every loan application on its merit and done the same level of due diligence then we wouldn't be in a situation where 12 to 14% of PSU loans are NPAs. We can kick this can as far down the road as possible but it will explode someday.
So now you're the authority on corporate lending? Explain why Reliance could get funds while GOI couldn't. And we have no idea about your banking relations or credit worthiness to comment on why you weren't given loans in time. But if Mallya received loans from a bank without proper scrutiny or documentation, who should be held responsible? Mallya, or the banker that made the decision to lend?

Also remember if there are diversions of funds from one firm to another without justification and documentation, there are Auditors both internal and External that report to the Board and the Shareholders. A director cannot embezzle funds without the knowledge of the Board or the auditors. So who is then complicit? Mallya or auditors and the Board also? Auditors of the firm (Respectable Price Water House) publish the audited accounts which will show the diversion. If that has not been indicated by them - then you have no basis to put this rubbish.

In sentiment such as this, one fact that is often forgotten is that the company aside from the owner - also feeds thousands of employees. And this circulation allows the economy to grow. Shuttering industries impacts the families dependent on it and also effects the economy bigtime. But for that you sir need to learn Macro and Micro Economics.

You may not understand this - but a dying firm tries everything to come out of its sickness. Once it fails, most of those actions will appear criminal to the outsider - but there is no other option on the inside. And Industry is a risky enterprise. We must make it easier for people to get to the point of becoming job creators. Lending must be made more logical and secured with adequate assets. But - failures will still occur. Ahem [whisper] look at the Wall Street Collapse in 2008[/whisper].
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Re: Indian Banks & Financial System

Post by Vivek K »

sankum wrote:Very few businessman are so honest that they will not indulge in misappropriation of company funds through money laundering if their companies are failing.
Again - the indian midset is totally biased against Indian industrialist where the public's opinion is simply that Industrialists are thieves pocketing the taxpayers money. The facts are actually completely the opposite. Indian investor Raj is loaded against Indian industries.
Forensic audit will show up any wrongdoing but it happens only when the company turns NPA.
Wrong! Internal and External Statutory audits are performed and reported in the annual reports of all these big firms and are prepared by large firms like Price Water House etc. The Board, the Bankers and the Shareholders that want to stay informed should have this information available at all times.
Higher private education alone generates Rs 50000 Cr per year black money which is laundered and no regulatory action against these institutions.
A typical dental college for example generates Rs 10 Cr per revenue in white and Rs 5 Cr in black money per year while actual expenses is less than Rs 5 Cr and the profit of Rs 10 Cr in black is laundered per year through shell companies and investment in properties.
Now you're mixing educational institutions with industries. And that is quite another thing.
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Re: Indian Banks & Financial System

Post by kvraghav »

I have only one question to ask, why does a businessman get to roam around in a Mercedes even when his company is in red? I think this is why people feel they cheat. That's also why no one is worried about Bhushan steel but are worried about Mallya. This is problem also about perception. May be govt should exclude such luxuries like cars costlier than 20 lakhs as company expenses.
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Re: Indian Banks & Financial System

Post by Vivek K »

So you’re saying- if I’m not able to drive better than a Maruti, why should someone else drive a Mercedes? Shows our small mindedness.

And again - you’re trying to have it both ways by deliberately linking the promoter to a corporation. You want the promoter to invest (till he dies) in the corporation to support it, but you have a problem if it is reversed - ie if the corporation supports the promoter.

The promoter’s personal wealth is his own irrespective of the corporation’s profits or losses. The promoter May chose to invest further in a loss making unit or he may not.

Why are Indians so anti-business?
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Re: Indian Banks & Financial System

Post by venkat_kv »

Vivek K Saar,
I think you are mixing up quite a few issues while raising a few valid ones. your points on Indian License raaj or the various depts. of govt putting the squeeze on industrialists for their cut is well noted and has an element of truth there. But to fix it doesn't mean that an industrialist will hide those expenses and try to create a bigger scam as justification. we need a separate relaxation/modification of the rules regarding the concerned issues.

Your idea of using Vijay Mallya as some sort of strawmen against what were good arguments, regarding the issues faced by industrialists weaken those very arguments. No industrialists starts with an intention to provide jobs for the society or fellow people. His driving force is profit and following his passion which ever way it may take him. You are bring up the argument that is used in Massa land as every business providing jobs. mallya is a perfect example of crony capitalist who made money through contacts.

Vijay Mallya didn't just run his airlines into ground. He was also given profitable routes from the South east Asia like Singapore and Malaysia at the expense of Indian airlines and yet he couldn't run his airlines should tell you something. This was done by meeting the then Airlines minister The NCP's Praful patel I think. I don't know for sure if he tried to siphon of funds to his F1 team, but then due diligence from the banks would have prevented them from giving him fresh loans (whether for F1 team or airlines) when he was facing difficulty in repaying the older ones.

He had the gall to tell the same banks that all he had was the shares of his Kingfisher company which were worth next to nothing during his bankruptcy proceedings and told the banks to take it or leave it. He gave them what was worth 3,500 cr worth in shares for his loan of some 8000-9000 crs. He had flat out asked the banks to take a haircut on the money lent to him. Try reasoning the same to a guy who owes you money when he gives you a percentage of it as take it or leave it. i am sure you will be quite pleased that he has to provide for his family and you will be quite sympathetic to his issues.

People are not angry at Vijay Mallya for being a businessman. He was a high flying king of good times, living large and standing with models like a mismatched pig in the midst of gazelles in his kingfisher calendar series. they are angry because he took large loans when he knew his company wasn't doing so well and essentially green lighted his loans using his image and then ran away when it was to face the music. Any other normal person on the street would be behind bars for doing a series of frauds.

And before you come back with the auditors whether desi or international ones, before the 2008 crisis the very same international agencies had extremely high ratings on some of the loans and derivatives that were eventually declared as turd. I will leave you with an anecdotal story.

Back in early 2000's when i was in engineering my classmate's father was in the RBI team that routinely went to check banks on their health and accounts. a bank called Charminar bank, had failed a few years prior in what is essentially telangana state today and his father's team knew this bank wouldn't survive if it kept its very same practices. But they were supposed to only give recommendations and make sure Bank follows them. the bank showed it followed/implemented every thing on paper and went belly-up in about another year or two later continuing the same practices.

there are a lot of business people in this country, some on this very forum who are following the rules even though most are just a hassle with some relevant one thrown in. they will be better examples for you reform against govt babu's rules and interference than absconding fugitives like Mallya and Nirav modi.

For every Elon Musk and Richard Branson (who i think also declared bankruptcy), you will also get a cheat like Theranos. Besides Musk, Jeff Bezos of Amazon took money from share market and were making loss for a very long time before situations improved. here common man wouldn't have issues if Kingfisher raised capital from market, rather they have taken money from Public sector banks and have people holding a pretty hefty bill for their life.

Without the bankruptcy bill that this govt brought in about 2017, mallya would have been frolicking around with models in foreign countries while simultaneously saying he doesn't have money to repay them back.
Last edited by venkat_kv on 29 Jul 2021 02:55, edited 1 time in total.
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Re: Indian Banks & Financial System

Post by venkat_kv »

Vivek K wrote:So you’re saying- if I’m not able to drive better than a Maruti, why should someone else drive a Mercedes? Shows our small mindedness.

And again - you’re trying to have it both ways by deliberately linking the promoter to a corporation. You want the promoter to invest (till he dies) in the corporation to support it, but you have a problem if it is reversed - ie if the corporation supports the promoter.

The promoter’s personal wealth is his own irrespective of the corporation’s profits or losses. The promoter May chose to invest further in a loss making unit or he may not.

Why are Indians so anti-business?
He is probably saying that irrespective of what i am capable of driving the other guy driving a Mercedes doesn't have the means for it. By this logic even a beggar should be able to drive a Mercedes if he can con the banks ( come to think of it this sounds like the reverse of left ideology where everyone should be poor).

the corporation is in losses and not some small amount but in hundreds of crores, you would want the promoter to pay attention to his failing business, not start another one and drive it to ground. Everything that mallya has run is in losses, which shows he either couldn't run his business properly or transferred money between them using parent company holding and so forth.

you are comparing this with the West where capital predominantly comes from market or institutional investors who also pick up a stake and get a say in the running of the company. what you have mallya doing is sticking the common tax paying Indian with a bill for his crony capitalism.
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Re: Indian Banks & Financial System

Post by Vivek K »

venkat_kv wrote: He is probably saying that irrespective of what i am capable of driving the other guy driving a Mercedes doesn't have the means for it. By this logic even a beggar should be able to drive a Mercedes if he can con the banks ( come to think of it this sounds like the reverse of left ideology where everyone should be poor).
Come again - So the banks are staffed by little babies that anyone can con and get loans from? I guess if that is the case then what you're saying would be right.
the corporation is in losses and not some small amount but in hundreds of crores, you would want the promoter to pay attention to his failing business, not start another one and drive it to ground. Everything that mallya has run is in losses, which shows he either couldn't run his business properly or transferred money between them using parent company holding and so forth.
But here you have decided the matter sitting on the outside without any information about what went wrong. Was it embezzlement like you believe or was it market conditions. Is Kingfisher's failure so surprising? Do a google search for airlines that have failed in India - see what you get. Were these airlines all run by Mallya? No? Then what is the common denominator in all? Airports Authority of India and their rates and charges, Fuel Costs (high taxation of fuel in India), Maintenance costs of older aircraft (once aircraft age they need a lot of maintenance and repair), lack of adequate MRO facilities in India, etc. I guess this is now true for India - "How do you become a millionaire? Start with a billion and buy an Indian Airline!"

You may want the promoter to do things all you want - but he/she may want the system (which is also at fault) to share the burden of additional investment and also to correct flawed policies before he throws all his money into the abyss.
you are comparing this with the West where capital predominantly comes from market or institutional investors who also pick up a stake and get a say in the running of the company. what you have mallya doing is sticking the common tax paying Indian with a bill for his crony capitalism.
And how is that different from India? All debt holders appoint directors on the Board and they have a responsibility to ensure that the company is professionally managed. In fact if you go the equity route in India, the promoters could do whatever they want for they wouldn't have independent directors on the Board.
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Re: Indian Banks & Financial System

Post by nachiket »

Vivek K wrote: Is Kingfisher's failure so surprising? Do a google search for airlines that have failed in India - see what you get. Were these airlines all run by Mallya? No?
And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
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Re: Indian Banks & Financial System

Post by venkat_kv »

Vivek K wrote:
Come again - So the banks are staffed by little babies that anyone can con and get loans from? I guess if that is the case then what you're saying would be right.

But here you have decided the matter sitting on the outside without any information about what went wrong. Was it embezzlement like you believe or was it market conditions. Is Kingfisher's failure so surprising? Do a google search for airlines that have failed in India - see what you get. Were these airlines all run by Mallya? No? Then what is the common denominator in all? Airports Authority of India and their rates and charges, Fuel Costs (high taxation of fuel in India), Maintenance costs of older aircraft (once aircraft age they need a lot of maintenance and repair), lack of adequate MRO facilities in India, etc. I guess this is now true for India - "How do you become a millionaire? Start with a billion and buy an Indian Airline!"

You may want the promoter to do things all you want - but he/she may want the system (which is also at fault) to share the burden of additional investment and also to correct flawed policies before he throws all his money into the abyss.

And how is that different from India? All debt holders appoint directors on the Board and they have a responsibility to ensure that the company is professionally managed. In fact if you go the equity route in India, the promoters could do whatever they want for they wouldn't have independent directors on the Board.
Vivek K Saar,
Again you are mixing a bunch of arguments to say that India stifles businesses and that is the only reason or main reason why kingfisher and Vijay Mallya failed and people are happy to hound him because he is an industrialist.

unless kingfisher Airlines has failed only due to the fees of AAI, cost of fuel, maintenance of aircraft, greasing the various departments that you have spoken about and this caused the operation to run into a few thousands of crores in debt. but that is not the complete picture. He had gotten the profitable Singapore and Malaysia hubs by shafting Indian Airlines (which another money sucking pit and a topic for discussion later), he still wasn't able to turn the business of KingFisher. you need to read on the report that came along that Air Deccan of Capt. Gopinath was taken over by force.

Vijay Mallya was very good with breweries - no doubt, but he should have done a proper market research and plan accordingly for airlines, the airlines in the west itself were failing for quite a few years, but got a lease of life with the 2008 crisis where everybody had some form of bailout money to save the jobs, industry or protect their turf of unions, state finances, strategic departments of flight controls or engine etc none of which would apply to India at that point of time. At the very least he along with other local Airline operators could have lobbied the govt or aviation ministry to reduce a few tariffs, if he could get Indian airline routes, then he should have been atleast able to get a few thing done with all the other aircraft operators together.

Your argument only proves he is a poor businessman at best and doesn't deserve any benefit of doubt after fleeing the country. this same businessman had not paid salaries for quite a few of his staff and was living large right up to the end. people would have supported him if he faced the law and made the same points saying certain laws in India are stifling business, but he ran away and then complained about Jail amenities.

he made his business dependent on those in power previously to bail him out in case of any hardships. Once the previous dispensation is out so was his business, this is not a businessman, but a case of crony capitalism that took shape with quid pro quo.

The banks are equally liable in giving him more loans when he wasn't paying the previous ones, but there are quite a few that were greenlighting their loans (taking newer and bigger loans to pay back the earlier ones). Nirav modi ran away when his business operandi was caught. There was another politician of congress in undivided AP called Lagdapati Rajagopal whose real estate venture Lanco hills in Telangana caued him to take some 10000 crores in Loans. he is still in country and probably going through the Insolvency process or whatever, similar amount similar crony capitalism and bank pressures to get loans, but one who has run away is getting the abuse.

Him getting private individuals or investors for his business wouldn't have caused too many issues other than the fact that money is owed to the Public sector banks which has the money from common folks in the country which is quite different from the west.

just because the windows were open for the thief to steal doesn't make him any less guilty of the crime, being finely dressed businessman not withstanding and the people of the house any more culpable.
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Re: Indian Banks & Financial System

Post by kvraghav »

Vivek K wrote:
Why are Indians so anti-business?
But what your saying is I drive a Mercedes for personal use by taking tax exemption for it whereas a guy driving maruti should pay tax for the income?
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Re: Indian Banks & Financial System

Post by Vivek K »

Self Deleted! Of no use to the discussion
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Re: Indian Banks & Financial System

Post by kvraghav »

Vivek K wrote:Aren’t you the corporate genius? Great deduction!!
I am not but may be you are. You might just be one of those guys who see salaried class as slaves eh?
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Re: Indian Banks & Financial System

Post by Mort Walker »

kvraghav wrote:
Vivek K wrote:Aren’t you the corporate genius? Great deduction!!
I am not but may be you are. You might just be one of those guys who see salaried class as slaves eh?
Many of us are in the salaried class. The problem is the person(s) who takes risks to start and keep a business running. Then hiring and keeping talent of the salaried class so they can harness their creativity. Everything in the Indian economic system is stacked against those who want to grow and keep a manufacturing business running. Power, water, land for manufacturing, transportation, labor laws, taxation laws, and the list goes on. Only those who can grease the skids and have political influence are successful.
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Re: Indian Banks & Financial System

Post by Vivek K »

Raghav - you're making assumptions. Let's use facts. I am a salaried person and let's leave it at that. I have seen the Indian system up close. We need to make it easier for more people (like yourself) get the opportunity to be "job creators". Some are destined to fail - failures are not unique to India and they certainly are not all the result of criminal action. They happen the world over. But for industrialization and growth, you need a lot more to succeed than to fail.

Understand this - Your typical entrepreneur does not start an industry to steal money from it. An industry does a lot for the economy - taxes, employment, food on employees plates etc. The taxes go towards infrastructure building etc. In industrialized nations, it is estimated that every dollar invested leads to a $7-$10 economic impact.

When you put industrialists behind bars for losses, you are stepping over investing sentiment. Though some will still invest, but a lot more will opt out. This perpetuates the colonial mind set that the British left behind - only a chosen few remain rich and the rest work for them. It is time to create more wealth and spread it to more hands.

I chose Mallya as an example. Aside from him, India has a long history of jailing and killing its industrialists. Little wonder that we lag in industrial growth.

On the flip side, look at the investment in farming - 100s of 1000s of crores. And not a penny in taxes plus money laundering leading to terrorism, parallel economy etc. Why isn't farming treated like industries? Farmers get free power, free food, interest free loans, launder black money to increase income and yet still fail. So who is the criminal? Food for thought?
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Re: Indian Banks & Financial System

Post by Vivek K »

Mort Walker wrote: Many of us are in the salaried class. The problem is the person(s) who takes risks to start and keep a business running. Then hiring and keeping talent of the salaried class so they can harness their creativity. Everything in the Indian economic system is stacked against those who want to grow and keep a manufacturing business running. Power, water, land for manufacturing, transportation, labor laws, taxation laws, and the list goes on. Only those who can grease the skids and have political influence are successful.
Totally agree.
Consider this:
Politicians for their elections give free power to farmers and raise prices on Industries. Some industries can transfer the raised cost to the consumer but others that cannot (those in import substitution) suffer losses and fail. And the tragedy is that the farmer ends up paying the cost of free power indirectly through more expensive cars/tractors etc.
Corruption: Every inspector that visits an industry, every bank official, every power official, etc. want bribes from industries. Where does the money come from? From the industry. How does it show these expenses? Through falsifying records. Take the Cafe Coffee Day owner's case of harassment by taxation officials. If you dig there will be 100s of others like him.
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Re: Indian Banks & Financial System

Post by Ambar »

If you believe SM Krishna's son-in-law and DK Shivakumar's daughter's father-in-law committed suicide because of some petty IT officials then there isn't much to say. ABC (the parent co. of CCD) has been a part of the INC ecosystem for 3 generations, they are not the kind of people who can be harassed by some govt. babu , no one believes that story. The place where his body was found suggests the reason behind his death is a lot more murkier and complicated than what is reported.

No one here denies businessmen in India don't have challenges, everyone from the billionaire Ambanis to someone running a kiraana shop have to go through the rigors of our system, the point is how should banks protect themselves from being looted through fraudulent loans from proven crooks like Mallya, Nirav Modi, the Singhals etc. NPA is a problem for all of us including other honest businessmen who cannot easily access capital and when they can the cost of capital is near prohibitive.
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Re: Indian Banks & Financial System

Post by nachiket »

Ambar wrote: No one here denies businessmen in India don't have challenges, everyone from the billionaire Ambanis to someone running a kiraana shop have to go through the rigors of our system, the point is how should banks protect themselves from being looted through fraudulent loans from proven crooks like Mallya, Nirav Modi, the Singhals etc. NPA is a problem for all of us including other honest businessmen who cannot easily access capital and when they can the cost of capital is near prohibitive.
The existence of crooks is not the reason for high NPA's. Not everyone who fails to repay is a crook but they would end up creating NPA's anyway. Failure is a part and parcel of business. The problem is the processes at the banks. It is the bank's responsibility to ensure that they do a thorough investigation of any entity's history and ability to repay and only then agree to provide the loan. It is clear that they are failing to do that. Either because their people who sign off these loans are corrupt or incompetent. They can't stop crooks or people with no collateral or fallback mechanism to repay approach them for huge loans. That is their right. They do need to have the ability to analyze the applicant's situation and make a decision based solely on what is best for the bank. Not on whether the applicant is a langotiya yaar of the bank officer or pays for the bank officer's new Mercedes or simply because the bank officers are incapable of an accurate assessment and get taken for a ride.
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Re: Indian Banks & Financial System

Post by dsreedhar »

I am in general agreement with Vivek and Mort. The deck is stacked up against industrialists in India. The whole system seems to be setup for failure. From costs of capital, labor, regulations, kickbacks to cut throat competition from international players especially China, put all, is a big hurdle for growth of industries and industrialists.
Most industrialists do run business for a profit motive not primary focus of employment etc, but they do not intend to make money criminally.
Having said that i do not mean Mallya is free of any crime. Identify the specific crimes he committed and be punished for it and be it not just for his business failure and loan default. Along with him those who are supposed to do their duty and keep a check including the bank officials be taken to task if they did any wrong.

I have couple of questions though.
-What is the loan interest rate to industries in India vs US, China etc?
-When these huge (1000s cr) default amounts are mentioned, is it the net amt how much it is owed to the bank or is it the original loan amount that is defaulted?

When there are reports that Mallya defaulted on 9000cr loan, the perception of larger public is he pocketed the whole. But in reality some of the money may have been already paid to bank, some part of money went to people thru employment, some to corrupt politicians and ofcourse some pocketed by him. Isnt it?
It would be helpful to analyze such cases. How much was the original loan amount, how much has been paid so far, how much paid in employment, how much in net did the industrialist pocketed from it? How much economy it generated? And how much is the real economic loss etc.
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Re: Indian Banks & Financial System

Post by chetak »

dsreedhar wrote:I am in general agreement with Vivek and Mort. The deck is stacked up against industrialists in India. The whole system seems to be setup for failure. From costs of capital, labor, regulations, kickbacks to cut throat competition from international players especially China, put all, is a big hurdle for growth of industries and industrialists.
Most industrialists do run business for a profit motive not primary focus of employment etc, but they do not intend to make money criminally.
Having said that i do not mean Mallya is free of any crime. Identify the specific crimes he committed and be punished for it and be it not just for his business failure and loan default. Along with him those who are supposed to do their duty and keep a check including the bank officials be taken to task if they did any wrong.

I have couple of questions though.
-What is the loan interest rate to industries in India vs US, China etc?
-When these huge (1000s cr) default amounts are mentioned, is it the net amt how much it is owed to the bank or is it the original loan amount that is defaulted?

When there are reports that Mallya defaulted on 9000cr loan, the perception of larger public is he pocketed the whole. But in reality some of the money may have been already paid to bank, some part of money went to people thru employment, some to corrupt politicians and ofcourse some pocketed by him. Isnt it?
It would be helpful to analyze such cases. How much was the original loan amount, how much has been paid so far, how much paid in employment, how much in net did the industrialist pocketed from it? How much economy it generated? And how much is the real economic loss etc.
the "loans" were obtained through "connections" and patronage and it was never intended that these "loans" be paid back but to be written off as NPAs at the appropriate time.

RS ticket was bought openly and paid for in cash and the few votes that were short were "arranged" by the eyetalian mafia by the time worn subterfuge of "cross voting".

such people used the mafia family darbaari system and lootyens ecosystem in which every favor is paid off in "commissions"

The banks are not clean. People have taken their cuts here too.

The fiddling with the SWIFT system is not as easy as is made out in presstitutes reports. Low level guys simply do not have such power.

The SWIFT is watched carefully and excessive use by any one employee or by a customer is always flagged. If no action has been taken then it is very clear that high level management involvement is active and yet no senior level bank employees have ever been taken to task.

They have system logs that are sent every day to the higher ups who check for anomalies using set parameters or algorithms. This is the same methodology that is used by airlines and it is how the many thousands of flight data records in any airline is checked frequently and automatically flagged for violations by the flight crew.

BTW, some presstitutes own houses in dilli that has cost them between 30-50 crores. All their illegal building permits were regularized and approved by ministers. These are guys who appear daily in the news and on youtube giving gyan to everyone. How did they get so much money and so quickly.

How do you think the people like radia flourished in dilli. Her trusted staff consisted only of very senior level retired babooze, loyal to the mafia and so their clout was a very saleable commodity. There are still very many radias' in dilli even today. They also exist in every state with direct reach into the ministries. They help with "facilitation". Keep looking in the newspapers because people even advertise openly for such facilitators to "help" out in projects

It is not the interest but the manner in which their loan applications are processed. Huge loans with no collateral or guarantees are available to these favored "industrialists" whereas the common man is made to run around for a few measly lakhs loan from the same banks. NPA is the name of the game

This has been going on for decades with the largely dilli based industrialist gang that used their wealth to keep the mahatma looking suitably poor and "mahatma like" and they formed the foundation of the lootyens gang. They provided the funds for the congis at that time for the "freedom" movement. They are entitled beneficiaries even today.
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Re: Indian Banks & Financial System

Post by Ambar »

dsreedhar wrote:I am in general agreement with Vivek and Mort. The deck is stacked up against industrialists in India. The whole system seems to be setup for failure. From costs of capital, labor, regulations, kickbacks to cut throat competition from international players especially China, put all, is a big hurdle for growth of industries and industrialists.
Most industrialists do run business for a profit motive not primary focus of employment etc, but they do not intend to make money criminally.
Having said that i do not mean Mallya is free of any crime. Identify the specific crimes he committed and be punished for it and be it not just for his business failure and loan default. Along with him those who are supposed to do their duty and keep a check including the bank officials be taken to task if they did any wrong.

I have couple of questions though.
-What is the loan interest rate to industries in India vs US, China etc?
-When these huge (1000s cr) default amounts are mentioned, is it the net amt how much it is owed to the bank or is it the original loan amount that is defaulted?

When there are reports that Mallya defaulted on 9000cr loan, the perception of larger public is he pocketed the whole. But in reality some of the money may have been already paid to bank, some part of money went to people thru employment, some to corrupt politicians and ofcourse some pocketed by him. Isnt it?
It would be helpful to analyze such cases. How much was the original loan amount, how much has been paid so far, how much paid in employment, how much in net did the industrialist pocketed from it? How much economy it generated? And how much is the real economic loss etc.
The hurdles are well known but it is also the same system which encourages fraud and deception. While not all NPAs are because of fraud, almost every large loan in India is through bribes and corruption which inevitably results in poor quality of loans, fraud, poor quality of collateral etc. No matter how solid your business and how good your balancesheet looks, one cannot walk into the SBI HQ and get a 250 cr working capital sanctioned without paying off some neta, multiple IAS babus and senior VPs in the bank. This also means that there is almost always a "stimulus" outside of the normal risk assessment when it comes to approving loans.

To answer your questions, the cost of equity in the US is around 5%, the cost of equity in India is around 13% to 14%, so yes, it is far more expensive to rise capital in India than it is abroad. This is why Nirav Modi was borrowing money in Europe using Indian banks for LoU so he could borrow more cheaply .

The interest burden isn't vastly different.

Here it is for India -

Image

and interest burden in the US -

Image

The NPAs are calculated on the loan account, so it is the original principal. Any account delinquent for 90 days or more is considered as a "non-performing asset". In case of most of the large loans the credit is rotated, ex : if 1000 crore Rs is borrowed, 100 crores is repaid then again 100 crores is reborrowed .

As for what % of a bad loan went to running the actual business vs what % went into running the business to the ground, i doubt if any bank does such an analysis. From a lenders stand point its the quality of collateral and timely repayment of the loan is what matters.
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Re: Indian Banks & Financial System

Post by Cyrano »

e-RUPI to be launched today

e-RUPI is a cashless and contactless digital payments medium, which will be delivered to mobile phones of beneficiaries in form of an SMS-string or a QR code.

Taking the first step towards having a digital currency in the country, Prime Minister Narendra Modi will launch an electronic voucher based digital payment system “e-RUPI” Monday. The platform, which has been developed by the National Payments Corporation of India (NPCI), Department of Financial Services, Ministry of Health and Family Welfare and the National Health Authority, will be a person-specific and purpose-specific payments system.

How will e-RUPI work?
e-RUPI is a cashless and contactless digital payments medium, which will be delivered to mobile phones of beneficiaries in form of an SMS-string or a QR code. This will essentially be like a prepaid gift-voucher that will be redeemable at specific accepting centres without any credit or debit card, a mobile app or internet banking. e-RUPI will connect the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface.

The system has been built by NPCI on its UPI platform, and has onboarded banks that will be the issuing entities. Any corporate or government agency will have to approach the partner banks, which are both private and public-sector lenders, with the details of specific persons and the purpose for which payments have to be made. The beneficiaries will be identified using their mobile number and a voucher allocated by a bank to the service provider in the name of a given person would only be delivered to that person.

What are the use cases of e-RUPI?
According to the government, e-RUPI is expected to ensure a leak-proof delivery of welfare services. It can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertiliser subsidies etc. The government also said that even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.

What is the significance of e-RUPI and how is it different than a digital currency?
The government is already working on developing a central bank digital currency and the launch of e-RUPI could potentially highlight the gaps in digital payments infrastructure that will be necessary for the success of the future digital currency. In effect, e-RUPI is still backed by the existing Indian rupee as the underlying asset and specificity of its purpose makes it different to a virtual currency and puts it closer to a voucher-based payment system.
Also, the ubiquitousness of e-RUPI in the future will depend on the end-use cases.

What are the plans for a central bank digital currency (CBDC)?
The Reserve Bank of India had recently said that it has been working towards a phased implementation strategy for central bank digital currency or CBDC — digital currencies issued by a central bank that generally take on a digital form of the nation’s existing fiat currency such as the rupee. Speaking at a webinar on July 23, RBI deputy governor T Rabi Sankar said that CBDCs “are desirable not just for the benefits they create in payments systems, but also might be necessary to protect the general public in an environment of volatile private VCs. While in the past, RBI governor Shaktikanta Das had flagged concerns over cryptocurrencies, there seems to be a change of mood now in favour of CBDCs on Mint Street. Although CBDCs are conceptually similar to currency notes, the introduction of CBDC would involve changes to the enabling legal framework since the current provisions are primarily synced for currency in paper form.

Does India have appetite for a digital currency?
According to the RBI, there are at least four reasons why digital currencies are expected to do well in India: One, there is increasing penetration of digital payments in the country that exists alongside sustained interest in cash usage, especially for small value transactions.
Two, India’s high currency to GDP ratio, according to the RBI, “holds out another benefit of CBDCs”. Three, the spread of private virtual currencies such as Bitcoin and Ethereum may be yet another reason why CBDCs become important from the point of view of the central bank. As Christine Lagarde, President of the ECB has mentioned in the BIS Annual Report “… central banks have a duty to safeguard people’s trust in our money. Central banks must complement their domestic efforts with close cooperation to guide the exploration of central bank digital currencies to identify reliable principles and encourage innovation.” Four, CBDCs might also cushion the general public in an environment of volatile private VCs.

Are there global examples of a voucher-based welfare system?
In the US, there is the system of education vouchers or school vouchers, which is a certificate of government funding for students selected for state-funded education to create a targeted delivery system. These are essentially subsidies given directly to parents of students for the specific purpose of educating their children. In addition to the US, the school voucher system has been used in several other countries such as Colombia, Chile, Sweden, Hong Kong, etc.
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Re: Indian Banks & Financial System

Post by chetak »

nachiket wrote:
Vivek K wrote: Is Kingfisher's failure so surprising? Do a google search for airlines that have failed in India - see what you get. Were these airlines all run by Mallya? No?
And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
mallaya's troubles actually started when he did not do due diligence when he bought out another airline.

the sole reason for the purchase was because he wanted the rights of the other airline to fly abroad.

he was blind to everything else and he got raped.

the other went on and tried to rook a very huge industrialist and he got raped. That guy took the losses and shut the other out of the market.

the airline industry in India is not just about profit and loss. Each failure is a political thriller about who funded, who parked swindled funds in which airline and how they sank. Names are not a secret in the industry.

BTW, all airlines in India are run by the same illegally funded, black bloated ecosystem.

Someone specifically banned one airline from flying to the US for many years.

Was that a coincidence or what......
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Re: Indian Banks & Financial System

Post by Vivek K »

nachiket wrote: And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
The crime being losing money and being unable to repay loans? What crime is he accused of? A failed enterprise can be accused of a variety of failures. India has no bankruptcy protection for industries. And a long record of killing jailed industrialists. No surprise then that he chose to run. And he did offer to repay the principal amounts back to the banks. Don’t go by the banks’ public clAims of sensational losses. They add unreasonable amounts to the amount owed to exaggerate and pressurize borrowers.

At the end of the day - the intent was - India must do everything possible yo keep her industries running . Learn from the US’s handling of its bailouts if airlines and auto makers. It is far better for the economy to keep people employed.

mallaya's troubles actually started when he did not do due diligence when he bought out another airline.

the sole reason for the purchase was because he wanted the rights of the other airline to fly abroad.

he was blind to everything else and he got raped.

the other went on and tried to rook a very huge industrialist and he got raped. That guy took the losses and shut the other out of the market.
Again - this is not a criminal action. Failure is a possibility in every industrial venture.
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Re: Indian Banks & Financial System

Post by chetak »

Vivek K wrote:
nachiket wrote: And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
The crime being losing money and being unable to repay loans? What crime is he accused of? A failed enterprise can be accused of a variety of failures. India has no bankruptcy protection for industries. And a long record of killing jailed industrialists. No surprise then that he chose to run. And he did offer to repay the principal amounts back to the banks. Don’t go by the banks’ public clAims of sensational losses. They add unreasonable amounts to the amount owed to exaggerate and pressurize borrowers.

At the end of the day - the intent was - India must do everything possible yo keep her industries running . Learn from the US’s handling of its bailouts if airlines and auto makers. It is far better for the economy to keep people employed.

mallaya's troubles actually started when he did not do due diligence when he bought out another airline.

the sole reason for the purchase was because he wanted the rights of the other airline to fly abroad.

he was blind to everything else and he got raped.

the other went on and tried to rook a very huge industrialist and he got raped. That guy took the losses and shut the other out of the market.
Again - this is not a criminal action. Failure is a possibility in every industrial venture.
Funds diverted and spirited out is illegal. Under invoicing, over invoicing and padded operational/logistics expenses are not usual business methods.

A simple and honest case of business failure is not only understandable but also acceptable. Even this will lead to legal and personal financial consequences for the owner/promoter because not everyone will agree to take a haircut.

Either don't risk other people's money or be prepared for the outcome. Either way, it's his butt on the line and his personal assets at risk

these guys were running a well worn, tried and tested scam to feed off the public trough.

Too bad for them that Modi happened
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Re: Indian Banks & Financial System

Post by Vivek K »

chetak wrote:
Funds diverted and spirited out is illegal. Under invoicing, over invoicing and padded operational/logistics expenses are not usual business methods.

A simple and honest case of business failure is not only understandable but also acceptable. Even this will lead to legal and personal financial consequences for the owner/promoter because not everyone will agree to take a haircut.
And for detecting and reporting that you have internal and external auditors that have statutory responsibilities to warn the Board and the shareholders of such acts by the executive of the firm. This must be on the audit reports and inserted into the annual reports of the firm.
Either don't risk other people's money or be prepared for the outcome. Either way, it's his butt on the line and his personal assets at risk
With that attitude - don't hold your breath for the industrial climate to change anytime soon! You actually make my point well. It IS the industrialists butt in India with all other sectors/agencies constantly attacking the investor. So drop the pretension of being business friendly.

Added Later - this started to counter the misinformation spread about Indian industrialists and the widely held belief here that they are a bunch of crooks that setup shop only to steal public money. The intent was to point out that a) Banks are not little babies that anyone can come and take their money through bribes etc. Banks must be held responsible by shareholders and by the GOI for their poor lending decisions; b)Shutting down industries does more harm than good) Killing industrialists in jail (Rajan Pillai, Pawan Sachdeva...) because of their links with the opposing party or for whatever flimsy reason harms investing sentiment.
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Re: Indian Banks & Financial System

Post by Vivek K »

nachiket wrote: And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
So can you detail what happened to Jet Airways and its creditors? Was the case ever resolved?

Some excerpts provided by Google Chacha:

Bad business decisions (It is always that in hindsight for a risk averse nation)
In 2007 Jet Airways incurred debt to fund its expansion. It bought debt-ridden Air Sahara and rebranded it as its low-cost subsidiary JetLite. Unfortunately, the burden of the debt coincided with the 2008 Financial crisis. Demand fell and oil prices surged.

In 2013 Jet Airways started a fare war with low-cost carriers IndiGo and SpiceJet. The airline’s market value dropped and the company started posting losses. To make things worse, this was combined with high fuel prices and slow domestic growth.

In 2019 a consortium of 26 banks led by SBI approached NCLT to recover dues.

The state decided to help prepare a rescue plan to save over 22000 jobs. There were political reasons as well. Prime Minister Modi’s pro-business image was threatened. He couldn’t afford for a prominent company to go bust under his watch and leave so many people unemployed.

So the end result here - same as in Kingfisher Airlines. Loss of 22000 jobs. Chalta hai? Another good day for the banks? $5Billion unrecovered still?
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Re: Indian Banks & Financial System

Post by chetak »

Vivek K wrote:
chetak wrote:
Funds diverted and spirited out is illegal. Under invoicing, over invoicing and padded operational/logistics expenses are not usual business methods.

A simple and honest case of business failure is not only understandable but also acceptable. Even this will lead to legal and personal financial consequences for the owner/promoter because not everyone will agree to take a haircut.
And for detecting and reporting that you have internal and external auditors that have statutory responsibilities to warn the Board and the shareholders of such acts by the executive of the firm. This must be on the audit reports and inserted into the annual reports of the firm.
Either don't risk other people's money or be prepared for the outcome. Either way, it's his butt on the line and his personal assets at risk
With that attitude - don't hold your breath for the industrial climate to change anytime soon! You actually make my point well. It IS the industrialists butt in India with all other sectors/agencies constantly attacking the investor. So drop the pretension of being business friendly.
this does not mean that industrialists in India get a free pass.

If you need money, put up the collateral and take loans withing your capacity or get more "partners" to cosign, thereby spreading the risk

business friendly does not mean what you think it means. The age old tried and tested business principles still apply but the govt red tape is reduced as much as it can be to make it easier and thus business friendly.

In the Philippines, they all take a bribe from investors but that bribe is a "standard flat fee" depending on your investment and the amount is a pittance relative to the investment.

All the required forms are filled out and the very next day, they are brought to you personally for your signature, and three days later all permissions are delivered in your hand and You will never ever see that guy again.

That is one way of being "business friendly" In many countries, you don't even have to pay the "fee"

ripping off the bank because "vidhayak, humare chacha hain" is not being business friendly. It is a criminal act, period.
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Re: Indian Banks & Financial System

Post by chetak »

Vivek K wrote:
nachiket wrote: And none of those owners are in jail or fugitives from the law despite those failures. Only Mallya is. Should tell you that you are barking up the wrong tree here trying to defend him. Mallya isn't in his current predicament because of anti-industrialist mindset of Indians. He committed a crime and refused to answer for it, choosing to run away instead. His fellow businessmen who lost their airlines and other companies but were not willful defaulters did not have to run away.
So can you detail what happened to Jet Airways and its creditors? Was the case ever resolved?

Some excerpts provided by Google Chacha:

Bad business decisions (It is always that in hindsight for a risk averse nation)
In 2007 Jet Airways incurred debt to fund its expansion. It bought debt-ridden Air Sahara and rebranded it as its low-cost subsidiary JetLite. Unfortunately, the burden of the debt coincided with the 2008 Financial crisis. Demand fell and oil prices surged.

In 2013 Jet Airways started a fare war with low-cost carriers IndiGo and SpiceJet. The airline’s market value dropped and the company started posting losses. To make things worse, this was combined with high fuel prices and slow domestic growth.

In 2019 a consortium of 26 banks led by SBI approached NCLT to recover dues.

The state decided to help prepare a rescue plan to save over 22000 jobs. There were political reasons as well. Prime Minister Modi’s pro-business image was threatened. He couldn’t afford for a prominent company to go bust under his watch and leave so many people unemployed.

So the end result here - same as in Kingfisher Airlines. Loss of 22000 jobs. Chalta hai? Another good day for the banks? $5Billion unrecovered still?
Modi pays meaning the taxpayer is paying. Why

In the case of KFA, there was no employee of KFA in the UK who was left high and dry because their salaries were not paid. They have laws there protecting employees which our "socialist, and secular" govts just don't have the testimonials to enact.

That is why no KFA employee in the UK is gheraoing mallaya everytime he makes a public appearance. They have all probably found new jobs. No dues are owing to them by KFA

whereas in India, he would be mobbed by ex employees of KFA because he owes them back pay and other money in lakhs per employee

If goyal's airline sank, good riddance. They just could not hack it. the owner is running a private enterprise. Tax payers don't figure in the equation. Profits are corporatized and losses are socialized which is nothing but lemon socialism.

"socialize the losses and privatize the gains," is not anyone's idea of being "business friendly" It is a commie pipedream of a ploy to rip off the taxpayer for the benefit of favored owners. Why would Modi do such a stoopide thing when his is not the responsible govt for sinking of so many shady airlines in India

BTW, you have to dig much, much deeper into google to find out why jet sank and why they were banned from flying to the US.

As regarding what happened, there are many on the forum who will be able to give you chapter and verse but one doubts if anybody will do so because this is an open forum.

airline employees are well educated and will find themselves other jobs. The class IV employees are all contractor supplied and many have been redeployed in other places. I know this for a fact. Those who are still sitting at home are the unfortunate unemployable.

No govt will ever agree to "support" such employees by giving them govt jobs or whatever or even absorbing them in Air India, it will take only a handful of highly politically and babooze connected family members and just those few will get on board

"Business friendly" does not mean that everyone's job is guaranteed in perpetuity by the govt. That would be political suicide and open a brand new avenue for "inspired" failures by shady enterprises and crooked entrepreneurs.
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Re: Indian Banks & Financial System

Post by Prasad »

I thought Mallya got screwed with the civil aviation ministry bringing in the 5 years min rule to start overseas rides. Under Praful patel or something. Apart from KF not being run as a tight ship like Indigo and leaking money behind the flash and great looking flight attendants.
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Re: Indian Banks & Financial System

Post by chetak »

Prasad wrote:I thought Mallya got screwed with the civil aviation ministry bringing in the 5 years min rule to start overseas rides. Under Praful patel or something. Apart from KF not being run as a tight ship like Indigo and leaking money behind the flash and great looking flight attendants.
When KFA was running, it was the best damn airline in India.

It provided excellent and often unmatched services that were driven by mallaya's ego for perfection and not the usual airline economics.

he bought the other airline because they had the rights to fly abroad while his own airline had a couple of years remaining, give or take, to reach the five year mark. That was a hollow shell and it was what basically sank his entire future and wiped out his very considerable fortune.

Many of his own employees were hugely ripping him off, especially the senior lot.

Given all that and the shenanigans that were got up to later, they sank the airline.

Mallaya is headstrong was also new to the airline industry, so he depended on advice from outsiders and he got it from the wrong people.

BTW, all politicos were his bum chums because he is naturally a very generous guy and he paid for everything. They took undue advantage of him and abused his 24X7 hospitality that ran with or without him. The eyetalian mafia let him down and shunted him out after making use of him. No one else from among the constant freeloaders came to help though one gathers that the then PMO was inclined to help him. That is also when the loan fiddling came into play.
Vivek K
BRF Oldie
Posts: 2931
Joined: 15 Mar 2002 12:31

Re: Indian Banks & Financial System

Post by Vivek K »

chetak wrote: this does not mean that industrialists in India get a free pass.
You mean like VG Siddhartha got a free pass? Does any industry in India get a free pass? I don't know your background - but have you been in the trenches running an industry?
If you need money, put up the collateral and take loans withing your capacity or get more "partners" to cosign, thereby spreading the risk
And you think that is not done? Come now - don't just repeat the banking basics.
business friendly does not mean what you think it means. The age old tried and tested business principles still apply but the govt red tape is reduced as much as it can be to make it easier and thus business friendly.
I understand your perspective is - Industry is setup to steal money. So industrialists must mortgage their undergarments to get money. However, ease of doing business is a whole lot more than lending. Here is what wiki uncle says - "India jumped to 100th place out of 190 countries in the World Bank's 2017 ease of doing business index, from 130th in the 2016". Man 100th place - for country that aspires to be a power!! I'll leave you to explain how this is deliberately under-rating India despite all measures by GOI and how easy it is now to catch industrialists.
In the Philippines, they all take a bribe from investors but that bribe is a "standard flat fee" depending on your investment and the amount is a pittance relative to the investment.

All the required forms are filled out and the very next day, they are brought to you personally for your signature, and three days later all permissions are delivered in your hand and You will never ever see that guy again.

That is one way of being "business friendly" In many countries, you don't even have to pay the "fee"
And so are we aspiring to be "Declared Corrupt" like the Phillipines? Is their system the best? I don't see them as industrial powers or a role model for growth. But if you say so ......
ripping off the bank because "vidhayak, humare chacha hain" is not being business friendly. It is a criminal act, period.
So obtaining a loan is a criminal act? The banker that gave you the loan without requiring adequate security is the angel and the vidhayak the deity. Only the industrialist that tries to toil and provide jobs to folks is the thief! Ok - that is your persistent, consistent message. Again, don't hold your breath for industrial growth in India.
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