The perfect way to distribute wealth? Have more public guarantors for mega loans - Firstpost
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The perfect way to distribute wealth? Have more public guarantors for mega loans

I have just sent out a letter to the chiefs of all Indian banks, volunteering my services as a guarantor for any rich man's loans. I have attached my CV, two photographs, a copy of my PAN card, Aadhaar card and an affidavit on official stamp paper stating that I am not rich and do, therefore, qualify as a guarantor.

I then went to the Forbes list of wealthy individuals and have written to all of them saying I have no problem if they take a trillion dollars and I can be surety for it if they give me a cut. The bank can fix my assets that include one slightly damaged laptop, a seven-year old car with a 'tkkk ttkk ttkk' sound on corners, a 42-inch HD TV that flickers occasionally and a signed painting by Hussein that may or may not be real, but has a horse in it.

The thing is when they freeze my account, after the person I stood guarantee for, it will be the level of a half melted ice cube. Look at the farmer Manmohan Singh. In a heartwarming and gallant effort to save the banking industry and narrow the fiscal gap between him and the millions that Vijay Mallya had been given, they blocked his Rs 4,000.

Representational image. Reuters.

Representational image. Reuters.

I am ready to sweeten the deal and go up 1000 percent — you can block Rs 40,000 for every billion. The bank can then pay me a fee for the services rendered and for once I might go singing to the bank.

I cannot understand all these people whining about Bank of Baroda using a farmer and a security guard as their defence against misappropriation by the super-rich.

It makes sense. I am asking Raghuram Rajan to integrate this new approach to the distribution of wealth by encouraging such guarantors because everyone is happy and they want to show it and even Subramanian Swamy cannot whinge.

The system is simple. The bank gives the big, fat juicy loan. It then tells the fat cat that 'x' percent has to be given to the guarantors annually as a fee. These folks are picked by lottery (it will be so popular that there will be a demand for reservation quotas), but at least the paperwork will be in order.

Another 'y' per cent goes to the bank and its totem pole, and once we admit that all these nationalised banks must be doing exactly the same thing and it is not some incandescent brilliance on the part of B of B but the normal malpractice, think how many of us will be beneficiaries.

The fat cat agrees (wouldn’t you?) and a hundred or so common guard variety citizens are benefitted. Talk about macro-micro financing; this is brilliant.

The fat cat then goes and makes more money and pays interest on the loan and as more and more loans are given, more and more guarantors become solvent.

This is Nobel Prize-winning stuff.

And the bank is also hedging its bets. It knows that everyone is not going to run away or default or cheat because those are the odds. It is like aviation. Once in a while a plane will fall out of the sky, but by and large it will land safely.

And finally, when it is all done and dusted and the VGS (voluntary guarantor scheme) is introduced as part of the financial policy and my guy has done the dirty and is watching cricket in Venezuela, they can come and take the painting.

Of course, if it is real I will just jump ship and start looking for my own guarantors.

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