Is the Rise of Vijay Mallya and Nirav Modi a Reflection on India’s Government and Banking System?

Fraud cases involving high-profile figures like Vijay Mallya and Nirav Modi have raised significant questions about the safety and reliability of India’s banking system and governmental oversight.

System Loopholes and Responsibility

Any offender will undoubtedly find loopholes within the existing system, and the onus is on banks, the Reserve Bank of India (RBI), and the Government to identify and address these gaps. While it is important to rectify these issues promptly, there is a notable difference in the scenarios surrounding the Mallya and Modi cases.

With respect to Shri Vijay Mallya, the Non-Performing Asset (NPA) loan has been declared as wilful by the Consortium of Banks, and suits are still pending with the Supreme Court of India regarding non-payment of his bank dues. On the other hand, the Nirav Modi case entails an outright fraud, with no securities pledged to the bank, and was executed in collusion with some unscrupulous bank employees.

Banks and Passports: What Role Does the Government Play?

Shri Mallya is currently contesting the legal battle with the Government of India from abroad, but banks have managed to recover approximately 155 crores from his charged properties. In both cases, the Government of India has revoked their passports. It is crucial for the banks to be strictly monitored by the government to ensure that they uphold ethical and legal standards.

During the demonetization movement, it was observed that bank managers, driven by corruption and a desire for commissions, facilitated the laundering of black money. Similarly, banks extended substantial loans to fraudsters like Mallya and Modi without proper collateral, allowing them to abscond with money that did not belong to them. It would be unfair to constantly hold the government responsible for the actions of incorrigible scamsters.

The Role of the Government as a ‘Umpire’ in the Economic Game

India’s approach to its economic development often mirrors a scenario where the government functions more like an umpire who decides the rules of the game rather than a neutral judge. This analogy can be explained by comparing the government’s role to that of an umpire in a cricket game.

As the umpire, the correct decision is made based on the rules, and penalties or rewards are given accordingly. However, when the umpire starts dictating how the game should be played, what opportunities players should have, or even takes ownership of the teams, the game’s fairness is compromised. Similarly, when the government tries to manage private enterprises and business, it can undermine the natural competitiveness and fairness of the market.

The government’s role is not to engage in business or development; its primary responsibility is to ensure a level playing field and maintain the integrity of the economic system. By taking on the mantle of a business owner, the government risks alienating private operators and stifling innovation and competition.

Conclusion

While the cases of Vijay Mallya and Nirav Modi are certainly indicative of systemic issues within the financial and judicial systems of India, it is crucial to maintain perspective and understand that the government’s role should be that of a judge and not an active player in the economic game. By fostering an environment of transparency, accountability, and fair competition, India can address these concerns and ensure a robust and resilient economic system.

Therefore, it is essential to work towards strengthening our financial institutions and government oversight, ensuring that the system is transparent and free from corruption. Only through such measures can India hope to address the challenges posed by these high-profile fraud cases and ensure a secure and fair banking environment.