Rod Steiger, cast in the movie No Way To Treat a Lady, would understand. I wonder if the government does, that Indian savers are treated most shabbily. One hopes it does, because it is the intention of this government to try to wean savers away from investing in physical assets, and into financial ones. This is so as to be able to fund the massive investment needs of the country ($1.5 trillion on infrastructure alone, in the next decade).
Well, if you want to seduce investors towards financial assets, you must do your darndest to protect them. The government, and the regulators, and the investigation agencies are all badly failing in doing this. Shame on them.
There are several examples.
This paper carried the headline ‘PACL victims to get refund’, giving the impression that they had been recompensed. Actually, each investor would get a paltry ₹2,500 only! The scamsters, Pearl Agro, had raised some ₹45,000 crore from 5.5 crore investors. If each of them is to recover ₹2,500, it amounts to ₹13,750 crore. Where is the rest?
The regulator did nothing to stop the Ponzi scheme when it was happening. To dupe 5.5 crore people is not a matter of a day or a week; it takes years. What was SEBI doing? Was SEBI the regulator or someone else? As in the NSEL scam, both SEBI and FMC maintained that they were not supposed to regulate the entity, and it slipped between regulatory gaps.
No way to treat a saver.
After that the investigative agencies not only take their own sweet time but often mess things up. In fact, in the 2G scam case, the Supreme Court, whilst acquitting A Raja and others, admitted that the evidence had not been well presented.
Last week, the Enforcement Directorate in a raid on P Chidambaram’s house in Delhi, found a draft of the CBI status report on the 2G scam which was filed with the Supreme Court in a sealed cover in August 2013. This report is given in secrecy to the Supreme Court. How was it obtained by the former FM?. Are investigative agencies truly independent? Do they scuttle honest investigations?
No way to treat a saver.
Customers of four public sector banks, Allahabad, BoI, Syndicate and UCO, were defrauded of ₹1.4 crore by the employees of the banks misusing their Aadhaar card details. So bank depositors are not protected either. Will the government, which is compelling everyone to link everything to Aadhaar, compensate those defrauded?
No way to treat a saver.
Shockingly, in response to an RTI query, the Ministry of Finance has responded that it does not have information about the quantum of bank loans given to Vijay Mallya!. Are you kidding me? So, if the banks do not recover from Mallya, because the government admits it has no information on the loans, will it result in a bail-in of banks, by seizing the deposits of customers?
No way to treat a saver.
If savers are not treated well and do not feel protected, will they move more of their savings towards financial assets? This is the question the government should mull over.
(The writer is India Head — Finance Asia/Haymarket. The views are personal.)