Wednesday, October 24, 2012

Collateral damage

What is Collateral damage ? Wikipedia says thus: Collateral damage is damage to things that are incidental to the intended target. It is frequently used as a military term where it can refer to the incidental destruction of civilian property and non-combatantcasualties.[1][2]

But collateral is also used by banks; "collateral security" means additional security to the main obligation in a contract. 

So why didn't the banks seek collateral security when Kingfisher Airlines asked for loans? Is it because Mallya was an MP? 

Now we hear that crores will be written off since Mallya is not personally liable. The salary for the staff at KF, as well the whole loan can easily be covered by Mallya. Instead this playboy is busy holidaying in UK and advising Indians. He dares talk about India when all he has done is rob them.

"Last year's race was a tremendous success. I'm sure we can expect an equally spectacular event this year. Buddh International Circuit always looks after us very well and I know that they have been working hard behind the scenes to fine-tune the circuit and facilities even more.

Today our FM says that our farmers are honest but only poor and hence loans should be given to them. What sympathy! If only a miniscule % of money that the banks indulge in the way of loans given off/ written off for the biggies, is used in better ways, this country can support the hardworking farmers in a big way. The below is the story of one farmer who killed himself - Nagalinga Reddy. There are scores of others who die for the lack of a 1 or 2 lakhs and whom the banks hound without any respite. When banks don't mind writing off loans in crores for a few, the rest are forced to depart from this world.

He was $9,000 in debt to three banks, one cooperative society and moneylenders. Bank officers regularly came to visit, and one bank took legal action. The moneylenders regularly harassed him. He avoided the ignominy of having the cooperative society post a public notice saying his land would be auctioned only by paying them a small sum.

Our FM continues to say the following:

The finance minister further said that if a corporate borrower fails to pay the loan, it is the bank which suffers, not the borrower.

And why dear FM? Why should the banks suffer? Have you made specific laws to make it thus?

People like Mallya continue to be an hero to many since they seem to get away with anything. His only business is the business of indulgence. He has also carved a generation to copy this way of living too.

Can Mallya be brought back to India to pay for the collateral damage?


  1. Banks losing out with the busting of Kingfisher is in fact the collateral damage of the policies followed by Governments. Be it BJP, Congress, Left or Right they all will have business tycoons and tyrants like Mallaya as cahoots.
    Look at the US elections. The two presidential candidates must have to win to repay the huge funding they got for their campaign. the loser will be in for hard times. How does the repayment happen? by greasing back the hands of the big corp orates who have funded.

    In Mallay's case the BANK CMDS too must be booked for sanction of loans without securing.
    This guy tried to be a Richard Branson and has his foot bin the mouth.

    1. Anil: Yes the bank CMDS need to be booked. Someone has to take responsibility..

      If Chidamabaram is sincere let him revise laws and make stringent punishment.

  2. It is truly ironic that despite Kingfisher Airlines being such a spectacular failure Mr. Mallya continues to enjoy the 'good life'!

    1. Manju: he is like our politicians.. all gain with no pain.. zero accountability..King of good times indeed...

  3. This is what frustrates me..why banks kept silent for so long? why they keep on lending money without any recovery? why no collateral?
    Why all authoriies keep supplying everything and mounting debts? will they do all this for common man?..NO

    and to top it people like Mallaya keep getting the social respect and good life...

    1. Renu: The banks thought KF would fly high.. they blvd playboy Mallya. If it was the common man, the gunda would have been at his doorsteps the second he defaulted payment.

      Mallya is still loved by many.. yes sadly.

  4. Hello Kitten,

    Thanks for this timely article. This is exactly the point that esteemed journalists like Shri P Sainath have been making. While many of these super billionaires have ways to influence the system and get their job rolling on; millions of farmers are still desperate to get even 10-15K at a decent rate of interest. What kind of justice would we have in such a society.

    To be frank, we would have been less bitter about this entire Mallya episode had he been more sober and earnest. To top all his failings he still flaunts his indulgence, ridicules the media for blowing his story out of proportion and audacious enough to continue his shitty tweeting.

    And the banks now are going to convert one-fifth of his debt to preferential equity. Cheez!!! ... so much for taking on the risk themselves.

    And we complain about Maoism, Naxalism and other insurgencies.

    - Deeps

    1. Deepu: Most of these millionaires made money by twisting the system or robbing. Another example would be the Ambanis. But as long as a nexus exists between the politicians and these business establishment nothing better shall come out.

      Mallya needs to pay for his sins.

  5. When Kingfisher first fell on bad times, the State Bank of India converted some of the loans into equity. At that time, TN Ninan wrote an article in one of the Business dailies expressing shock at how favorable those terms were to KF. It must have been easy to bribe our public sector bankers.
    The middle-class can never expect such treatment. In fact, indirectly the burden of these soured loans falls on us.

  6. Indirectly the aftermath of each of such actions fall on the majority of Indians. While the rich gets richer and are well supported, the poor fall;never to rise.


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