On Friday, Alagar killed himself. The previous day, the 26-year-old farmer in Tamil Nadu’s Ariyalur district had been accosted by men from the private finance company that had lent him money to buy a tractor. Alagar had managed to repay all but Rs 2 lakh.
The conversation wasn’t pretty. They took away Alagar’s tractor. Next day, he drank pesticide. The family cremated his body the same day. There was no complaint, no case. Alagar is now a tiny statistic – another farmer dead because he saw no way out of the dark hole of debt.
He should have made sure he owed Rs 200 crore, not Rs 2 lakh. Better still, Rs 2,000 crore. He would still be alive, probably somewhere abroad, speaking out against the media and putting the onus on the lenders.
To tell you the truth, that’s where the onus ought to be. Money lending is a serious business. Through official channels, it can even be grim. Professional moneylenders have been feared as much for their accounting skills as their determination in recovery, which at times turns violent.
Not that the official channels are any more merciful. In the early days of credit card propagation in the country, goons were known to show up at the door of a defaulter. The banks they represented were quite reputed, even multinational.
Forget credit cards, have you taken a home loan? Did your fingers almost fall off after signing your name 62 times? Did you smear your fingers with ink to put your prints? Happened to me. After checking my salary slips, bank account, and whatever little I owned (a car), they wanted to see the visa stamps on my passport. Apparently a more travelled person is more worthy of a loan. Then they wanted someone to guarantee that I would pay back (a gullible cousin signed that form). After all this, they kept the house as the collateral, its original registration papers went to the bank.
However, if you borrow big, and from multiple banks, you get certain privileges. Journalist Shekhar Gupta wrote in a newspaper column about a State Bank of India shindig at Mumbai’s Brabourne stadium six years ago. Chairman OP Bhat was making a presentation, lights turned out, on the bank’s technology transformation. The corporate bigwigs were present, as was finance minster Pranab Mukherjee. Midway, Vijay Mallya entered with his retinue. Mr. Bhatt paused, and asked for the lights to be switched on.
Mallya, already in losses and debt, was quite the showstopper. The banks seemed keen to lend him money. He obliged them. Now the banks behave as if he ran away without paying for his meal, though they had invited him as their cherished dinner guest.
CBI director Anil Sinha, speaking at a conference in Mumbai, blamed the banks for dragging their feet. “Despite our repeated requests, banks did not file a complaint with the CBI [against Kingfisher Airlines].” Eventually, the CBI went head and registered a case last July, though loans were given to the Vijay Mallya-run company in the eight years to 2012.
Top executives of banks say some events cannot be foretold. True, the cancellation of coal blocks, or of telecom spectrum allocation, and the sudden decline in global demand for commodities were difficult to predict for us. But it should be a little less difficult for banks.
If they were indeed caught off guard by the turn of events, so could have been Mallya. He had a good record until aviation took his fancy. It’s a business that has brought down many. Jet Airways had its own brush with death after acquiring Subrata Roy’s Sahara Airlines. Kalanithi Maran, who knows a thing or two about the ways of doing business in India, bit the dust at SpiceJet, eventually selling it to Ajay Singh, apparently for Rs 2.
Why only aviation, there are other sectors that have got the better of big names in business. Look at the list of the biggest debtors of corporate India: you will find some household names in it. None of them put a gun to a banker’s head. It was a business decision to lend them money – a decision that now seems silly. The banks should have known better.
Now there is a clamour to brand Mallya anti-national. He messed up, and this writer’s heart goes out to his employees and others who suffered because he messed up. But did he act against the country’s interests? He just cannot pay back because his business went kaput. Bankers are not known to be wordsmiths, but in this case they have proved to be quite inventive.
(The views expressed are personal. The writer tweets at @suveensinha)