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The Great Bank Robbery: A Conversation with Author Sabyasachee Dash
The book The Great Bank Robbery, authored by Sabyasachee Dash and V Pattabhi Ram, discusses eleven banking scams that have rocked the nation since independence. Without sensationalizing the dramatic content, the book examines how the frauds took place, the strategies used by the scamsters, the regular regulation loopholes they used and the lasting impact of these scams. It also discusses the role of prime stakeholders in the banking and finance sectors such as auditors, company boards, the regulator and the rating agencies
Hi Ramya, good afternoon and this is nice to engage with you on this topic and I'm really grateful that you're privatized to indulge in this discussion. I'm sure you have enjoyed while reading the book as much as we enjoyed while writing. So before I start responding to the question that you asked me specifically how we came up with this idea, how the book was structured
Thank you so much for that. I also had a question about the books forward penned by Sri Bibek Debroy, economist and chairman of the Economic Advisory Council. I simply loved what he had to say about the premise of the book, and I think it perfectly sets the tone for the interesting right that the book is. I was also quite, quite taken in by the fact that the book has glowing testimonials from thought leaders like Subramanyam Swami, Rajya Sabha, MP Amar Patnaik and others
But it was not very easy to finalize the list and obviously in our roles and responsibility division it was with me somehow part of my passion. I try and build a personal rapper with people who I hold in high regard because of their academic credential, their position as key opinion leaders who vent their views of national importance, all that stuff. And obviously most of these people fit into that scheme that I just described. Dr. Devroy happened to us almost like a miracle
My next question is focused around a particular part of your book where you actually mentioned that in economic terms, nationalization was a dark cloud with a few silver linings. Could you perhaps elaborate for those of us here who did not quite follow the events pre and postnationalization too closely to better understand what really transpired?
Because there's a bit of background to it, why there was nationals in the first place. And please note the 14 banks, they were chosen to be nationalized during that time. They held almost 80% of the bank deposit in the country and the banks were like right from Alabama Bank till Tiluco Bank. So there's a list of 14 banks and it got followed up with Second Wave of Nesmission which was carried out in 1980 when she came as the PM for the second time
So after 67, okay, just one year to her taking over the government failed that, you know, the banks are not giving credit to agriculture and not enough credit to the industries and due to this agriculture and industry sector were facing crisis and they are more focused on extending credit for trade. I just discussed, right?
And then moving on there is what Nationalization did is apart from rising NPAs, it also resulted in a complicated interest rate scenario because different banks have got different interest rates. And eventually it became so bad, even the central bank had to manage hundreds of trades. And due to these complicated procedures of interest, the loans were not given to those who were actually needing it. And as a result of this, defeated the very purpose of the Nationalization. And this mind boggling structure was only brought down after 99
You also talk about how the ownership, public or private, may not have much of an impact on the stability and profitability of a bank and its functioning. And the examples that you've given of GTB and yes, bank clearly point out to the fact that private banks do not necessarily fare better than public sector banks. In fact, I did read somewhere that the very need for nationalization arose due to the failure of the private sector in the area of commercial viability and the protection of depositors money
And of course after the formation of the Reserve Bank of India that's in 1935 900 private banks have failed in our country till the period of independence just between 19 I mean in that time itself between 35 to 47 900 private banks. So 1947 to 19 665 private banks failed even after 19 six and 36 bank failed. So these numbers are staggering all it means for us, is it's not, that will get us all the relief that we all are seeking
But the taxpayers'money again goes into the system, the banking system, but also somewhere the accountability of the regulators, the board, the auditors, the credit traders. So these are something which cannot be overlooked anymore. So when we say this, what we mean is there are dedicated chapters on that and there is no specific what do you call name calling or for that matter anything to defame or demean or anything outrageous. We have tried and cover it just to make it sense
Swell Team
@Swell · 0:15
If we sit down and analyze how the current situation is impacted by nationalization as a move, we can see that the government had succeeded in partially meeting its goal of implementing its developmental agenda as to the banking sector. Whereas in a welfare activity is a country of our size and scale, you need to have a very robust banking network spread across the country so that only public sector, only when banks were nationalized, we could achieve that
But whereas in a bank which is under the control of the government it is quite possible that political interference just as an Anecdote, one of the very senior official of Public Sector Bank told me the chairman of the bank gets shivering if a Pune from the Finance Ministry calls up. And that is in the previous regime of course but it is not that this regime that regime so this is what has happened and they just surface all the formalities and they just go ahead and give the loans
Now why I'm saying all this that is because this book is all about bad loans and how it has caused to add to the misery and the vulnerability of our economic system and politics and economics by default they cannot be divorced. So one needs to wait for more bank andings to drive the larger trend
Another thing is if you look at some global sound bite, the IMF, which very closely track emerging markets, particularly India, was in news when they said india has had to do with some of the highest levels of bad debts in the emerging markets. Banks are so stressed that they are not even lending to healthy companies holding back growth. And those who understand the role of IMF and World Bank, they will differentiate. World bank is primarily into funding to the development projects
So it has almost led to a situation where both banks and the clients are financially stretched and even after, even as we remain the world's fastest growing major economy with GDP expanding by 7% plus. But there are many economists which are genuine values of our country, say the growth is fragile because it is not being investment driven
Thank you so much for that. I think I will leave you with one final question. In your book, you also talk about how India's mounting bad debt problem is partly due to crony capitalism, where political opportunism plays a big hand. I think this is a hot take. Would you care to maybe elaborate on this view of yours?
That signifies an economic system in which business thrive not as a result of free enterprise, but rather as a return on money. Ms through the Perusion there is a nexus between a business class and the political class and this is a dangerous combination and sometimes media also joins it. So now I'll come in a minute