THE EXCHANGE. Good, bad and ugly

At business school we were told there are three kinds of people — those who make things happen, those who watch things happen, and those who wonder what happened (or is happening)! Many of us find ourselves in the third category over the last few weeks, with the banking system being shaken to the core.

A vast proportion of businessmen are neither wilful defaulters nor have they squirrelled away or siphoned systemic monies; they also don’t have never-ending amounts of capital to indemnify all stakeholders for business outcomes.

The prudent never intend to assume collateral risks in terms of reputation and monies beyond the core equity risk of a business. The imprudent don’t care.

What matters

But it now does no good to keep repeating that wrong-doers are rare, that delinquency must be resolved quickly and the delinquent must be punished (there are enough laws, safeguards and remedies to do these).

The narrative from business at large should probably change to “to each his own”. An ecosystem always has those who follow propriety and those who do not. Bad luck for those who don’t.

The rest do not merit shackles and scrutiny without evidence-based allegations, and must not be hampered in creative ways. Society cannot be emboldened to prima facie presume guilt in a class.

In a mature society, reasonable restrictions are placed only when justified by tangibles.

It is also of no consequence at which time a defalcation or transgression began. That it has taken place in itself points to neglect of duties and responsibilities by either the giver or the taker of a facility — and a failure of systemic checks and balances.

The leadership has to stand by policy choices; if the choice is that public sector banks will remain so owned, then taxpayer monies will have to be deployed.

Wails from the public at large have to be addressed in context. Advocating policy change as a response may need to be tailored as a comprehensive model, rather than be a generic reaction.

The hard way

Short-cut solutions do not exist and may lead to unintended or unforeseen outcomes. We cannot afford to play to any gallery. It does no good to the nation if daily commentaries descend to the lowest common denominator amongst the informed and uninformed, or sentiments.

It does no good to the nation if reputations of institutions and classes of economic participants crumble, as may well be happening.

Hyper-ventilation won’t solve a thing. For an economy of our size and aspirations, we must have the ability and maturity to face shocks.

These observations are interim in an evolving environment. Let us see where it leads. Suffice it to say that there is a real risk to genuine investment and business risk-taking on the horizon. The reason for lack of development must not become that good men do nothing.

Hopefully the strength, maturity and wisdom of policy architects as well as the institutional and governance strengths painstakingly built by good businesses will provide adequate resolutions.

The writer is an entrepreneur and past president of Ficci