THE NOT SO CURIOUS CASE OF VIJAY MALLYA

THE NOT SO CURIOUS CASE OF VIJAY MALLYA

 Wrongness attracts attention, reason does not.  The King of good times is now having some bad days.  Much after scathing criticism by the opposition parties for inaction against Mallya, the Government and banks finally acted in full swing by alerting the sleuths. Vijay Mallya   might be   guilty of a large scale   misuse of funds from a number of banks, his business might have busted for genuine reasons.  But what attracted the public is his flamboyant nature of showmanship and brazen display of wealth.

Banks’ refusal to extend the credit line forced Kingfisher to ground, if allowed this airlines flying could have benefited from the recent reduction in price of aviation fuel.  Perhaps it would have started paying the dues by now. The civil aviation is a very capital intensive and risky business. Almost all airlines in the world rely on venture capital funding from one source or the other. No commercial banks finance the privately owned airlines in the world unless they are investment banks. There are two banking entities in the developed countries.  Non-commercial banks take up investment activities like trading securities, venture funding etc.  They are responsible for taking such risky ventures and it is the part of their DNA to entertain some risk.  If such ventures go bust the investment banks are the first entities to bear the brunt.    The Indian banks play the roles of both kind of banking activities. The banks are main sources of providing funds to individuals and business units. The risk of default is high enough to destabilize the financial system of any country.

When Kingfisher Airlines was first launched in India, the press hailed it as business leader. They went overboard featuring Vijay Mallya as a man set out to change the aviation business in India. Now the whole narrative has changed. Everyone is bent on searching for more skeletons in the cupboards of the Ill-fated airlines for eye-catching headlines.

Banks made a blunder in funding the Kingfisher Airlines on its brand value and perhaps may not get back all the money from Vijay Mallya, the promoter.  Why did no one learn from the losses incurred by Air India, a public sector enterprise and a continuous money guzzler?  The SBI chief told recently in an interview that the loans were sanctioned to Vijay Mallya on personal guarantee. This guarantee is only a moral obligation to honour the commitment. Nobody except Mallya knows how loosely this moral fiber is knitted.

Either they are also partners in this loan-crime or dancing friends of   the King of good times     No one dared to switch off music and said the party was over. Now the banking system is shaken by ballooning NPA.  Everybody knows how difficult the task is to get the loans from lending institutions without tweaking and bending rules to support the business!  Businessmen get the rewards for their success and brickbats when they fail. The same cannot be applied to bankers.  There is no down side risk for bankers. No banker loses his job for providing huge money to businesses, on the contrary he gets fat bonus for disbursing loans. In ancient times, Hammurabi’s Code a 3800 years old Babylonian law stipulates the owner of the building be put to death if building under-construction collapses  and kills  someone.  Even now the onus of safety of building lies on the builders.  The structural defect known to the builders proves costly. But in the civilized setting, there is no punishment awaits the bankers for their structural defects.

Be relieved by the suitably substituting Bob Dylon’s lyrics “Blowing in the wind”

How many days must Mallya take to repay loans?
Before we call him an honest man?
How many days must Bank take to get full money?
Before we call them solvent?
The answer, my friend, is blowing in the wind.