A lack of transparency results in distrust and a deep sense of insecurity.
Indian Economy has always been a topic of interest around the world. Of this, a big component is Indian Banks. There has been a lot going inside them. The book that I have finished recently takes you to a tour of Indian Banking system and the miscarriages happening in it for a long time.
Let’s discuss the book on Indian Economy in detail so that you can decide for yourself if you would like to pick this book as your next insightful read.
Pandemonium: The Great Indian Banking Tragedy by Tamal Bandyopadhyay
Rajan made his famous comment,
‘You can put lipstick on a pig but that will not make the pig a princess’
As you start browsing the book, layer by layer it gets so intense as to what all has been happening in the Indian Banking and how the taxpayers money is in the careless hands of some.
What surprised me more was how the bankers failed to pertain basic common sense and how they kept on bluffing that everything was fine and kept on raising fresh loans to keep the balance sheets clean until Raghuram Rajan blew a whistle on it.
Money was routed into shell companies by forming fictitious loan accounts using software and one of the biggest panics came in the form of Punjab and Maharashtra Cooperative Bank fraud where around 21,049 fake accounts were created by HDIL group.
- Theoretically, shell companies are companies without active business operations or significant assets. They can be set up by business people for both legitimate and illegitimate purposes.
Also, the role of credit rating agencies came into suspicion when the ‘rating shopping’ that was being done by low rated companies was busted by the RBI. And the tale goes on & on & on…This book has too much to tell.
- A credit rating agency (CRA) evaluates and assesses an individual’s or a company’s creditworthiness. That is, these agencies consider a debtor’s income and credit lines to analyse the debtor’s ability to repay the debt or if there is any credit risk associated.
I would sum up by saying that Indian Banking is in a hodgepodge that it has created for itself knowingly or unknowingly.
For me, this book was an information capsule that was bitter to digest but needed.
If you’re curious to know about this blunder of Indian Banking, this is a must-read. (Also you should have basic economics awareness else you will have to use Google for some terms)
Also, the interviews with four Governors C.R. Rangarajan, Y.V.Reddy, D. Subbarao, Raghuram Rajan was a valuable and delightful read.
For more such book reviews keep visiting Books&Sstuff Blog.