Mallya row: Economist points out nexus between banks, govt. officials

Amid uproar over liquor baron Vijay Mallya fleeing the country, economist Mohan Guruswamy has levelled serious allegations against the banking system, saying the sector was in bad shape with the Non Performing Assets (NPAs) running into lakhs of crores.

He said there is severe corruption in the banking system as the politicians and government officials are involved in the decision-making process to grant loans to businesses.

"All this is a conspiracy and everyone is quiet on this. This is the way things work, there is corruption everywhere. Money is taken for giving any loan; the bank officials, government officials and politicians are involved in this," he said.

Guruswamy said the agencies are pointing fingers at Mallya while asserting that the real offenders in this case are the bankers who gave him loan despite the Kingfisher Airlines being in bad shape.

"Mallya's amount is less, it was just Rs. 4000 crore plus accumulated losses and collaterals. What kind of dumb people are these (bankers) who give loan against the brand name of an airline which is running under loss," he said.

"These banks do not lend without instructions. There is a cartel, they meet and instructions are also given from Delhi. This has been going on for many years. Ever since Industrial Licensing Policy was scraped, they have adopted this policy to control the industries," he added.

He said that the banking sector was in bad shape and blamed the respective governments in the last 20 years for the pathetic condition.

"The banking sector is really in a bad shape, they have Rs. seven lakh crores of NPAs. There are several big (business) families who owe over Rs. 90, 000 crores....They then restructure it and make changes. This has not been done by Arun Jaitley alone, it has been done by all the governments in the last 20 years. Nobody repays the government loans," he said.

Earlier, Mallya claimed that the banks gave him loans after evaluating all aspects, adding that he is not trying to evade the law enforcement agencies but is on a personal visit to the UK.

In an e-mail interview with the Sunday Guardian, the business tycoon said he feels that he has already been branded as a criminal in the country and therefore, it was not the right time for him to return.