Over the past 3 decades our regulators are REFUSING TO develop a vibrant retail (and wholesale) debt market. This has taken its toll in various forms.

The Harshad banking scam, the Ketan Banking scam – are the more famous ones. If there was a vibrant secondary market, no small bank would have needed a “consolidator” who bought “bonds” worth Rs. 1 crore for 5 banks. Each bank would have bought Rs. 1 crore worth of bonds.

Now if we had (have) a good secondary market corporate India would have been forced to borrow in that market. So the market would have told you every minute why Tata Power was in better financial shape than say Adani power. Why a shit like ADAG could not have raised any money in 2016 itself. You have seen nothing yet – the psu banks have far more shit than YesBank, and that is not likely to come out.

In none of the bank scams has the regulator ever been blamed. And if the regulator can come up with an “insurance claim settlement” kinda solution, is there an incentive to run a real tight ship like Hdfc bank does? The big Nbfc are lucky that they have not been asked to contribute to the “Regulator Dadagiri and Rescue plan”. If Rana Kapoor had gone to say IIT and IIM would the government have called all his classmates and asked them to contribute Rs. 10 crore each to “save” the bank.

One thing clear about this amazing solution – there is no need at all for the idiotic small saver / investor to worry about which bank he is keeping his fixed deposit. However, he should not be buying any equity anywhere.

Rajaji said long ago “Raja bane vyapari, praja bane bhikari” – this is so damn true. Now we have a capital lock in scheme  in which just a fraction of the shares of YesBank will be traded. Sounds ridiculous – this is like our greatest Industrialist converting his public limited company to private. He got away, and still gets called “epitome of corporate governance”. Well, we wear our blinkers do we not?

If we had a vibrant debt market we would have seen Tier 1 bonds available at a discount – and an amazing advance warning system. Now we find the marquee investors losing money. One such bond holder is Cholamandalam General Insurance. Now if the other brilliant regulator comes out with a rule “Tier 1 capital is not allowed ….blah blah” there will be nothing to feel surprised (shocked is it?). Which means now all the Tier 1 capital will be under pressure. Great. All this money will go and buy the Gsec at 6% yield. In a country where the 10 year yield for a top corporate is about 10% !

Amazing Regulatory over-reach. The solution is once more proof that a solution which looks “fair” is just totally criminal – but the participants have no choice. I also do not know how Hdfc bank, Icici bank, Axis bank, get classified as “Private sector bank”. Like how Hdfc insurance, Icici Insurance, Idbi life insur, Sbi………all get classified as “Private sector life insurance”.

Seriously other than Kotak bank, do we have any Private bank – of any significance? And we also know how much time and effort the regulator wasted in asking Uday to dilute his stake! The regulator feels it is too risky. Appalling.

I would prefer a bank owned by Uday and being careful. Honestly I trust Uday and Aditya Puri’s managerial skills far ahead of the Regulator’s ability to regulate.

Will any tears be shed if the regulator shed say 10,000 jobs to start with? and wind up their offices in all the states? Or are they rendering some “amazing services for the country which I cannot see”?