Dinesh Kamath's Editorial 'Loophole in our system exposed' that was published in Newsband

Loophole in our system exposed

Vijay Mallya’s leaving the country glaringly exposes the loopholes in the system that prevails in India. He left the country on the same day the banks had moved the Debt Recovery Tribunal to have Mallya arrested and his passport frozen.

The Kingfisher Airlines promoter faces cases for the recovery of about Rs.9,000 crore the airline owes the banks — for which he had stood personal guarantee.

Mallya has sought to project the corporate loan default as a case of business failure due to macroeconomic factors and adverse government policies.

Mallya has sought to portray himself as a wronged man, singled out for multiple proceedings while those who owe much bigger sums have not been designated as defaulters or investigated. Flaunting his wealth may give a man an appearance of flamboyance in good times, but it ill-serves his reputation in circumstances of adversity.

It is not the flight that Mallya took that exposes the system. It is the delayed attempt by the banks to book a wilful defaulter in time that exposes the system. Improper due diligence, imperfect assessment, wrong judgment on the part of banks have been the root causes for today's plight of banks who have limited options left with to recover the loan advanced and should they end up in having to write off a sum it will mean loss of good money thrown on a bad cause.

Mallya was elected to the Rajya Sabha in 2002 from his home state of Karnataka with the support of the Congress party and Janata Dal (Secular). In 2010, he was re-elected for a second term, this time with the backing of the Bharathiya Janata Party and the JD(S). Hence all this hungama is for satisfying public. Neither BJP nor Congress will bother.

Mallya could commandeer the services of the Ulsoor Gate Police Station (Bengaluru) to provide him "security" during the IPL series - the same police posse that was tasked with serving the ED summons notice on him and failed to "find" him at his address in his UB City, just a kilometer away. And not just that: the Tirupati Tirumala Temple had no compunction in receiving the gift of a huge gold bar from this baron although it was well known that he had deprived his own employees of their salaries.

The panacea for such defaults lies in the stoppage of borrowers leaving the country. Is the current system anything other than systematically transferring public funds to the ultra rich crony capitalists using the nation’s efficient banking system? Are there others who have not left the country, yet, although they may well have transferred their wealth abroad?