Somehow when we mention these words in the context of business in India, we expect the Government run enterprises to behave well. So a MTNL has to deliver phone connectivity, a SBI has to be customer friendly, a UTI has to be safe, A DD has to be unbiased, the bureaucracy has to be uncorruptable.

However, when it comes to the Private sector – evertything is maaf – in the name of free market enterprise. Today, over breakfast I read about the GTB fiasco – where a private bank has frozen its operations – and customer withdrawals – until October, when it is expected that the RBI will bail it out to ensure that ordinary investors do not lose their moolah.

In case their is a gap in people’s memory this is the same GTB bank that lent crores and crores on the advice of the master of the financial scam Ketan Parekh. Companies such as Pentafour, Global Telesystems, Zee Telefilms and Himachal Futuristic Communications Limited (HFCL) were the favourite receipients of the funds – and this wasn’t in terms of debt, but in terms of equity. When the market crashed in 2001, so did the value of what was invested. Remember the fiasco with UTI’s US64 mutual fund – well most of it was due to this kind of dodgy investment. At that time GTB was supposed to merge with UTI bank. The merger was called off and SEBI basically spanked everyone concerned. However, SEBI was the body that looked at stocks and shares, while the RBI is the body that looks after banking stability. The RBI was more or less been caught napping on this one especially in the context of the small investor.

The Government of the day, the NDA government, did nothing beyond this – no ordering the bank to be merged, nor any watchdog to keep an eye on a company that seemed to have dodgy financial insticnts. Nothing. But, that is hardly surprising considering that their political base and funding came from this segment of the population – the unethical trader and the unscrupulous merchant.

A great article from the Frontline from that time which is definitely worth reading. read it and you will ask the same question as I did – what the fuck was the then NDA government upto – and why was the bank not taken over.