Vijay Mallya’s secret departure to the UK is a big deal and the Narendra Modi government could end up with a lot of egg on its face. On Wednesday, the Central Government told the Supreme Court that the UB chairman had left the country on March 2. The opposition Congress is livid and Parliament was literally the battle ground for an opposition versus government battle. Mallya’s flight to UK is not just the case of an offender fleeing the country, although that is part of the problem because news reports suggest that the CBI and banks created a loophole large enough for the businessman to slip through. The larger question is the way financial markets are governed and
all evidence points to a ship with holes large enough for rats
to slip in and out.
The flamboyant celebrity is now ensconced in a country
house outside London and though he continues to tweet that
he is not absconding and is abroad because he is an international
businessman, the chances
of him returning on his own to
face the law and cough up Rs 9000
crore that he owes 17 banks, seem
remote. A shadow of suspicion
hovers over banks and the central
government and the finance minister
will have to give the nation some
straight answers instead of hiding
behind the past sins of the UPA government.
The former government
may have had a hand in pushing banks to advance more loans
to the beleaguered Kingfisher Airlines, but that was more than
two years ago and the present government will have elaborate
what it did to or did not do in the case.
The middle class in particular, is mad with the way one businessman
was allowed to literally swindle Rs 9000 crore. That
he is safe and sound in the luxury of his home in the UK is
doubly irritating. The middle class has a reason to be angry. It
is this section that provides banks with most of the deposits.
It is this class that avails of loans and it is taken to task if these
loans are not repaid. That Mallya was allowed to literally go
scot free, therefore, feels like betrayal.
Sparks will fly between the opposition and government, but
the moot question is, will the government use this opportunity
to clean up the banking system? There seems to be cozy ties between
bankers and capitalists on account of which rules and
regulations are flouted and good money is made to chase bad
money. All of the 17 banks knew that Kingfisher Airlines was
a poor investment, thanks to some bad decisions by Mallya
himself. Yet, they continued to lend money until the airlines
started defaulting on payment of salaries, airport fees etc. In
simple words they waited till the last minute to shut the door.
Indian banks are saddled with Rs 2.5 lakh crore in bad loans.
That is nearly five per cent of the total loans. This is a problem
inherited by the NDA government from the past. Previous finance
ministers had ignored the problem and the Modi government
will now have to deal with it in much the same manner
Barack Obama had to after financial markets the world
over threatened to go under. This problem is larger than Vijay
Mallya, but it is how the government chooses to deal with
the problem that will convey if it is serious about cleaning the
financial market and enforcing corporate responsibility.
