Chapter 6: I got to see RBI at work very closely in those days. A few buildings away in one of the LIC buildings, a war room had been set up to oversee the takeover of Indian banking. It was next to the YWCA International Guest House on Parkiament Street. A convenient walk from the main branch of Citibank at Jeevan Bharti building. The war room was eyeing the takeover of LIC through HDFC.
Everything was going as per plan. RBI was breathing down the throats of the new and struggling banks. At L Block in Connaught Place – was Bank of Punjab. They got more RBI visits than postman visits. They sold out. Promoters got nothing. In the middle circle of Connaught Place was the majestic main branch of Lord Krishna Bank. It was smart branding and a brilliant team. Dabur was behind it. The ownership was giving them indigestion. Pudin Hara wasn’t working. They sold out. And then there were all kinds of extras.
The aggregation vehicle used was Centurion Bank – an offshoot of 20th Century Finance – a proxy for Citibank with Devendra Ahuja as the front and institutional investors which mirrored the HDfC captable. This is where Ravi Parthasarthy came from to choreograph the ILFS scam. It rose to eminence with Harshad Mehta.
The team mirrored the Citibank playbook personified by Rajiv Maliwal. Premium graduates from small towns with more ambition than ethics. Show them the high life and put them to work. The Mughals did this centuries ago as did the British.
A country like iron is always destroyed by the rust within.
But then there is always a higher power. Call it divine. Call it consciousness. Call it whatever. And Karma catches up.
In this case it was 2008 financial meltdown. Citibank itself became a bailout case. It had to sell its Crown Jewels to survive. Thousands of benami accounts held by politicians and shady characters from around the world were just usurped. The accounts which carried the names of cats and dogs were operated by passwords. They just stopped working. There isn’t much help you can get from law when you are party to an illegal act in the first place. Citibank was desperate. Any money. anyhow.
Sabre Capital sold its bank portfolio to HDFC. Cash was cheap for HDFC. They had public deposits coming out of their ears. Citi needed money. So HDFc treasury was raided by selling the Sabre portfolio to them. Generating Rs 6800 crore in profits. Money that saved Citibank from annihilation.
And sowed the seeds for a series of scams – NSE colocation, NSE benami shareholding, ILFS, Nirav Modi, Dewan House, Srei, Reliance Capital. And then there are so many more. Totalling at least 500,000 crores.
Behind every major fortune, there is at least one major crime which goes undetected. But here it wasn’t one. But a battalion.
The Indian banking system was under threat like never before. The financial meltdown of 2008 saved India. Not economics or economists.
And one of the scams.
Which never did become one.
Was NPCI.
