A question of who deceived who or a question of systemic failure in our culture and society

Recent Article by Bharat Jhunjhunwala on How banks are deceived by companies points towards a systemic failure in our culture and society in general. So the result is, a father son duo asking for a ₹ 5 Cr. loan is scrutinized to the hilt and even a single red flag is enough for rejection while a large corporate asking for a ₹ 5000 Cr. is scrutinized to a minimum and many red flags are overlooked

Two types of frauds take place in our banks. One takes place with the connivance of the bank officials. The Punjab and Maharashtra Co-operative Bank gave loans to a company named HDIL even though they knew that the borrower was in deep financial trouble. The other type of fraud takes place when large companies mislead the banks, as Nirav Modi did to Punjab National Bank, and Infrastructure Leasing & Financial Services (IL&FS) did to a number of banks to the extent of a whopping Rs 90,000 crores.

https://in.news.yahoo.com/banks-deceived-companies-151428067.html

It should be obvious that this manipulation cannot continue ad infinitum. A time will soon come when the banks will realize that the subsidiaries are going under, they will stop extending loans to the subsidiaries, and the castle of the principal company will come crashing down, as it happened in the case of IL&FS. The question is, when? The banks and the Government must be proactive. All large companies having multiple subsidiaries must be considered inherently suspect. A forensic audit must be undertaken of the assets of the subsidiaries. The failure to undertake such an audit in time is responsible for the losses incurred by PNB and other banks. The banks must look at the profitability of the business of the son, instead of looking at the credibility of the father.

https://www.freepressjournal.in/analysis/how-banks-are-deceived-by-companies

Recent Article by Bharat Jhunjhunwala on How banks are deceived by companies points towards a systemic failure in our culture and society in general.

  • We are awed by all the glitters
  • We do not ask questions when we feel inferior
  • We tend to generalize and treat exceptions as general and general as exceptions to suite our agenda and ease
  • We are driven by sentiments rather than objectivity or logic
  • We over rely on “jugads” rather than on well defined systems and processes
  • An Expert is considered an expert if he/she can advise on circumvention and loop holes rather than the right thing to do
  • We tend to promote mediocre because it lines up to a system filled with mediocrity
  • We adore the powerful as infallible
  • We tend to over rely on third party certifications, awards, accolades and credentials rather than having our own criteria of judgement
  • We tend to forget and learn from other peoples mistakes leave alone our own
  • We readily place our trust on the untrustworthy and distrust the trustworthy
  • We are swayed towards the easier path more often
  • We tend to look at the short term rather than the long term

So the result is, a father son duo asking for a ₹ 5 Cr. loan is scrutinized to the hilt and even a single red flag is enough for rejection while a large corporate asking for a ₹ 5000 Cr. is scrutinized to a minimum and many red flags are overlooked