Ramesh Kumar is disgusted. At 55, he’s had a long innings as the administrator of the Indian Paneer Board. (For those unacquainted with paneer, it is a milk product that used to be in short supply in the glorious socialist years of the 1960s and 70s and the government had set up a Paneer Board to facilitate procurement.) Kumar is just one of the many that suck away at the milk and honey as it flows through the system, he works hard to keep the system intact. Right now Kumar’s surfing channels in his office cabin, he’s just got the latest flat screen installed, right next to the 3.8 horsepower treadmill that he will surely use soon. He’s watching the second episode of the Cobrapost.com expose (http://bit.ly/15vUzy8). The first, he remembers, had bank officials of three private sector banks across 20 cities secretly taped offering to turn black money into white for a person fronting for a politician. Episode two expands the sting to include 23 banks and insurance companies—both public and private.
I must admit I’m a bit surprised by the kind of debate that the Financial Sector Legislative Reforms Commission (FSLRC) Report (http://finmin.nic.in/fslrc/fslrc_report_vol1.pdf) has generated. The 439-page report has made recommendations to re-haul the Indian financial system to facilitate the journey of the $2 trillion Indian economy to becoming a $15 trillion one by 2026. The Justice Srikrishna Commission did not stop at recommendations, but went ahead and drafted law that that will make this happen. The draft Indian Financial Code (http://finmin.nic.in/fslrc/fslrc_report_vol2.pdf) has in it the blueprint of a principles-based, goals-oriented, democratic set of rules that, for the first time, have given consumers their place in the sun. Some of the debate trashes the entire report and calls for a total rethink. I believe this is based on either reading just the dissent notes or a very thin reading of the executive summary. But the conclusions these views come to are quite sweeping. While there may be merit in the argument against some parts of the report or draft law, it does seem a bit odd that instead of trying to correct what is wrong, some would rather throw it all out.
Until recently, bank branches were known anecdotally for trapping people into toxic insurance products. In a strange twist, employees at some bank outlets have themselves got trapped in the process of doing more than selling such products. If the expose by online magazine Cobrapost.com, which showed people it claimed were officials in Axis Bank Ltd, HDFC Bank Ltd and ICICI Bank Ltd across 20 cities offering to launder money, is correct, the crime moves up several notches—from mere mis-selling products to middle-class Indians to using the banks and insurance companies to turn black money into white.