Chapter 12C: 25 years ago I led the team which corporatised BSNL. Do we want SBI, PNB and BoB to go the way of BSNL, MTNL and the Telegram Department.
Let us look at the level of domination of the Citibank HDFC Axis Cibil ecosystem.
All of these are finally controlled through layers and layers by a common group of entities. Whose primary objective is to take over and thwart Indian progress. In telecom, we are fortunate to have Airtel and Jio. I
The level of collection of public funds is unbelievable :
HDFC Bank: Rs 50 lac crores
HDFC Insurance: Rs 4 lac crores
HDB Financial: Rs 1 lac crores
Axis Bank: Rs 20 lac crores
Axis Insurance: Rs 2 lac crores
Citicorp: Rs 2 lac crores
HDFC Funds etc: Rs 1 lac crores
Total: Rs 80 lac crores.
There is more:
HDFC Mutual Funds: Rs 10 lac crores
Axis Murual Funds: Rs 4 lac crores
Citicorp Currency ops: Rs 6 lac crores
Grand total: Rs 100 lac crores
Over USD 1 Trillion.
This figure has been reached by playing regulatory arbitrage between RBI, SEBI and IRDA. And exploiting the “no mans land” between them. For example ULIPs are most certainly an investment product and were in fact sold by the bank. But they were shown under insurance. This escaped the norms of RBI and SEBI. IRDA is a poor regulator. Mutual funds are under SEBI and not RBI. So whenever there is a violation of RBI norms, you just move FDs from the bank to mutual funds by playing with incentives.
If this is not systemic risk
Then what is.
These are Persons Acting in Concert.
Now let’s come to valuations. Banks lend money. Their best case is to get their loans back. This is not venture capital where you can get 10x back. 98% of the FDs picked up by HDFC as I pointed out months ago are loaned forward. A large chunk for long term mortgages. You cannot as a bank borrow money from FD holders with an average one year tenure and then loan it out for a ten year mortgage. One slight hiccup in Gurgaon real estate prices and the Indian economy will shake.
And let’s understand Gurgaon. It is on a seismic zone. It is a short missile distance from the border. It is running out of ground water. It is a basin with no natural drainage out (noida at least will drain into the Yamuna). The heat built up by the concrete and glass structures is making NCR air toxic. Infrastructure is collapsing. 50% of HDFC mortgages are in such locations.
The vision of the founders was to make affordable housing possible. Such that salaried people could buy a suburban house with a loan EMI equal to their house rent. The model was to get land from the local authority, set up a cooperative society and get a contractor to construct.
Now the Citi ecosystem extends to Blackrock, Blackstone and many other things black. Every hotel, every hospital is owned by things Black.
Sure you cannot fund smugglers, dacoits and land sharks. And have no NPA and very high profits.
But as a country
Is that what public funds are to be used for.
