The great Indian banking circus: A guide on how to use the Aam Aadmi and Mr Fraud counters

You belong to the salaried class, struggling to make both ends meet. You need a personal loan and walk into a branch of any nationalised bank. That’s where you find the first type of bank counter in the great Indian banking circus. Let’s call it the bank counter for the common man or, let’s say, the ‘Aam Aadmi’ counter. Here, you have to produce all documents that prove your identity, address, income, bank transaction records for at least half a year, employer details and evidence that shows the submissions are original.

Try playing around with any of the above-mentioned documents, with a small change here and there, and you will be pulled up in no time and will be questioned, harassed, publicly insulted and your record will be forwarded to credit bureaus and investigators depending upon the degree of manipulation, so that others -- particularly other bankers -- are alerted about the potential danger you pose to them, helping them up their guard against a potential fraudster — that is you.

Representational image.

Suppose you manage to secure a personal loan and, for some reason, default on one or two instalments, the story changes altogether. In the flash of a second, you will see the proverbial recovery agent at your doorstep. The alert banker will exercise his entire set of powers to locate you, your guarantor, uncle and his friends, to instil the fear of God in you and make you go to any extent to pay up. The infamous ‘name and shame’ operation kicks in. Your name, address and photo will appear in the newspapers so that the world knows you are a defaulter. You cannot really blame the banker for any of these excesses because he is just doing his duty.

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Now, welcome to the second counter. Let’s call it the ‘Mr Fraud’ counter. Normally, billionaires holding a small piece of the country as their personal assets, walk into these counter. Typically, loan requests are Rs 500 crore and above. This category of customer is not used to thousands, tens of thousands or lakhs. They borrow in hundreds and thousands of crores. Here, the rules are different altogether. The scrutiny explained above, at the Aam Aadmi counter, is not applicable at the Mr Fraud counter. All the nationally acknowledged and respected fraudsters walk into this counter and collude with the first vulnerable banker they come across and begin the scientific process of defrauding the bank step-by-step.

There is no scrutiny of assets, i.e. collateral that is pledged against the loan, no verification of the financial details of Mr fraud and his company/ies, no mechanism to verify the end-use of the money or even whether the documents submitted are a work of fiction or not. To do business in this counter without any scrutiny, there are only a few simple conditions. You need to be a billionaire, you need to be a fraudster or aspiring fraudster, you should know how to forge documents or use fake computer servers and most importantly, you should know how to flee the country on time. The modus operandi here differs for different cases:

Case 1: If you are one Mallya and has a forever loss-making airline and if you are highly politically connected, walk into any of the Mr Fraud counters of the nationalised banks, give a lecture to the banker about his responsibility on nation building, and convince him why he should sanction a Rs 1000 crore to you towards this goal, against collateral like a brand, goodwill, hopes, among other things. If he is not convinced yet, get a friend from Delhi to call the banker or offer him a foreign holiday. Once you get the money, start diverting it to other needy areas and never repay back. When your loan (around Rs 9000 crore by then) is declared a non-performing asset (NPA) and you seem to find yourself in a situation where the media trial begins and politicians are forced to act, take the next flight out of the country and mock investigators, banks, media and the judiciary from outside the country.

Case 2: If you are one billionaire Modi and run a jewelry chain that is frequented by bollywood divas and if you are in need of money, walk into the Mr Fraud counter, greet the banker, bribe him and forge guarantees. Till the time you keep bribing him and the auditors, you can keep renewing these guarantees for several years. As a next step, use these guarantees in another bank’s Mr Fraud counter to borrow money. Continue this process for as long as you can. You needn’t worry about not being able to get money because the government of the day will keep refilling nationalised banks’ coffers every year, to foster nation building. When the fraud surfaces, by which time you would have happily defrauded the bank of at least Rs 14,000 crore, follow the basic instinct of a fraudster and take the next flight out of the country and begin the mocking process in the Mallya way.

Case 3: If you are one Kanishk and need money, walk into the Mr Fraud counter again and present a bunch of falsified financial documents to the banker and borrow money on the basis of that. Going by the basic banking principles at the Mr Fraud counter, the banker or his auditor will never look at the true state of the documents and records you furnish. This, in other words, means you can keep doing the same stuff for a good eight years or so. After you have defrauded the bank for a while, say to the tune of Rs 824 crore, and the fraud comes out in the public, you can stop using the bank counter and follow the cardinal rule followed by all fraudsters—take the next flight out with immediate family, and look for safer pastures.

To sum things up, the Aam Aadmi counter and the Mr Fraud counter operate with different rules, ethos and professional efficiency standards. When it comes to the two counters, the banking regulator is like the mythical ‘Dhritarashtra’ from the Mahabharata. He simply can’t see the story on the Aam Aadmi side or he pretends not to see it.

The common man’s role in this saga, apart from being harassed and tortured, is to pay taxes on time to help refuel these banks, so that the lenders don’t run out of funds to feed Mr Fraud.