|» INVESTING IN INDIA|
Because it is one big laundering machine.
But in a world that is flat (though crooked) the monopoly of that brand attribute is rapidly changing - you no longer need to go to Switzerland, Singapore, or Mauritius to launder money.
As the Cobrapost sting operations across 49 branches of Axis Bank, HDFC Bank, and ICICI Bank in five zones have shown, you can allegedly launder money right here at home in India.
24x7: the branch managers will be willing to open the bank branches for you at special hours.
True, the chocolates in India are terrible - nor is the air as clean and crisp as the air in Switzerland.
But, when laundering money is your main objective, maybe those ancillary things don't matter.
These private sector banks have been opening branches at the rate of maybe 5 per business day. Over the next seven years, by the year 2020, these banks will have covered every nook and corner of India with their glass and steel branches. Before you can say "Cobra Sting" they will have converted all your dirty black money into sparkling white life insurance policies.
It may cost you Rs 880 per Rs 100,000 to do this magic trick - and it will cost you a lot more in hidden commissions if you buy those insurance products - but what are a few rupees between friends?
The good news is that the branch managers will have met their monthly targets. And these companies will have met their annual earnings targets. The senior managements of these banks will retire rich - their ESOPs will be worth a lot more.
After all, life is a "baniya ka hisaab kitab" - as a senior member of one of the stung banks had told me many years ago.
And that clearly shows up in the video tapes.
Life is about targets, profit growth, and market cap.
Life - and business - is not about ethics, about doing the right thing, or about being fair. We lost that innocence when people we look up to tell you "as it is".
The Mahatma's image may be on the notes but the impunity of Mrs Gandhi is in the hands that grab them.
Mr. Deepak Parekh, the venerable Chairman of HDFC, reminded us while talking at a CNBC event a few months ago: corruption is a non-issue and cannot be eradicated; the media are wasting their time talking about it.
It is this same corruption that generates the black money which allegedly gets laundered by supposedly holy private sector banks. Banks which have commanded a valuation premium (in full disclosure companies I am affiliated with, may own some of these shares for clients). This black money is one of the large engines of growth in earnings.
Banks moving into clean-tech, Indians can buy gold
The boring scientists and PhD types tell us that clean tech is a process of converting a low energy input into a higher energy output, without pollution.
But we know these scientist-type folks remain poor with dishevelled hair, frayed collars, and torn chappals.
The scientists need to learn the creative use of clean-tech technology as mastered by the suave bankers with gelled hair, stiff button-down shirts, and polished black shoes.
Normally, a person earning an income of Rs 1 lakhs would need to pay a 30% rate of tax to convert his income to what is called "white money".
But the clean-tech banks, using business principles that have baffled those with Ph. D.'s, can find ways to convert cash or "black money" into "white money" by paying Rs 880 per lakh, or a "conversion charge" of 0.88%.
That sure beats the official tax rate of 30% for your hard earned profits.
In fact, banks can now boldly advertise:
Contact your bank for further details.
India certainly needs more of these private sector banks (yes, RBI, please grant more licenses) and India needs more of its respected business leaders to suggest that fighting corruption is waste of time.
So, every time you hear about a new branch being opened in your smelly, stinky neighbourhood just think of it as another step in the right direction: by 2020 India will be the cleanest country in the world.
But, sadly, you will still need to visit Switzerland for their chocolates. They are the best!
Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)