Ramesh Kumar is disgusted. At 55, he’s had a long innings as the administrator of the Indian Paneer Board. (For those unacquainted with paneer, it is a milk product that used to be in short supply in the glorious socialist years of the 1960s and 70s and the government had set up a Paneer Board to facilitate procurement.) Kumar is just one of the many that suck away at the milk and honey as it flows through the system, he works hard to keep the system intact. Right now Kumar’s surfing channels in his office cabin, he’s just got the latest flat screen installed, right next to the 3.8 horsepower treadmill that he will surely use soon. He’s watching the second episode of the Cobrapost.com expose (http://bit.ly/15vUzy8). The first, he remembers, had bank officials of three private sector banks across 20 cities secretly taped offering to turn black money into white for a person fronting for a politician. Episode two expands the sting to include 23 banks and insurance companies—both public and private.
Kumar is unhappy. Why do these silly activists have to do this, he belches into his fifth cup of tea that he rests on his tummy table. Recognizing the great surge of indignant emotion, he pings his assistant in, he really needs to hold forth. He sucks in a deep breath that wobbles the cup dangerously and begins: “The problem with our country is all this sting-shing. Too much freedom. There is no problem in the system. Our banks work well. So do insurance companies. Our politicians are the epitome of gravitas and honour. Now this Cobrapost. What online nonsense. Things were easier earlier, now this online business makes anybody with a small camera think he is a hero. This Cobrapost. Why would anybody try and show our glorious banks down? We all do loose talk, so what if these bankers did the same. Did a single rupee get laundered? Any anyway, what did the Cobrapost sting show? We saw 23 banks and insurance companies, over more than 10 cities, caught in a secret camera (can’t we use Section 66A to ban the use of secret cameras and jail those who use them? They are disruptive of the smooth working of our system) offering to turn black money into white. Did it happen? No. Only gun was pointed, nobody died. So where is the problem?
See, if something had happened, if something was wrong, wouldn’t the stock market react? It is for some reason that it is called the barometer of public sentiment. What did it do? Nothing much, not so much as a nervous belch around banking stocks on 6 May. Of course, when Cobrapost ran its first sting in March, the stock market was nervous, the three bank stocks lost up to 5% that day and the Sensex fell 143 points. But quick work from the regulators and the government soon stopped this aberration. Clean chits were handed out smoothly—our dear leaders are so efficient that they did not even wait for an investigation. They did not even waste time in asking Cobrapost for the original tapes.
Those tapes show bankers offering to turn black money into white using products sold by the bank like gold and insurance policies. What total nonsense. We all know that gold is a pure metal, used in holy rituals in every religion of this great secular nation. No true Indian would defile gold by touching it with black money (touches both ears repeatedly). And insurance policies are gifts to policy holders. It is for their own good that these are used. And if on the sale, the banks make 40% commission, where is the problem? What, you asked, why no bank offered a mutual fund product? Arrey. These are useless, no commission. Why will banks sell? Ab agent ko bhi to ghar chalana hai ki nahin? I wish they would understand that No One Killed Jessica Lal was just the physical manifestation of a system that does not tolerate any question of the workings of our beloved leaders and their appointed leaders of the independent institutions.
This government and regulators have the right attitude. They’ve given the investigation of Cobrapost season two to an industry association of banks. An industry lobby group is just the right authority to do this work. Why, it is the same body that lobbied to keep effective interest rates on savings deposits at 0% for decades (see this column http://bit.ly/12d95F2 to know how 3.5% was actually 0% on savings deposits.) Of course, they will do a full and final investigation. Chaloji. Time to go home. Beacon chalu kar. AC on kar. I will come in half an hour.”
(Why do I feel like Boxer the horse in Animal Farm these days? Well, off to the glue factory soon for me. See some of you there. For those unacquainted with this great book, here is a summary: http://en.wikipedia.org/wiki/Animal_Farm. And no, sustained Google searches did not throw up an Indian Paneer Board. The Board and Kumar are fictional.)
Monika Halan works in the area of financial literacy and financial intermediation policy and is a certified financial planner. She is editor, Mint Money, and Yale World Fellow 2011. She can be reached at firstname.lastname@example.org