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Blog posts February 2018

Banking Sector Under 8th Transit of Saturn

         8th Transit of Saturn & Scams in Indian Financial Sector 

     Those who have availed Financial Astrology lessons from me, had been told since 2017 , that Banking / NBFC sector was to face correction during Saturn's transit in Sagittarius . This period is known for scams , loss of money , name and fame of banking sector . Last time it was 30 years back during 1987 to 1990 and now this is due from 2017 to 2020 period so we have started getting season of scams by Nirav Modi , Vikram Kothari and many more to follow now .  

What Happened In Previous 8th Transit  of Saturn ?

 30 years before , the Indian banking sector was solely about public sector banks . In 1987 , Rajiv Gandhi led Congress government was under pressure because of Bofors scam . To win elections,  opposition led by Chaudhary Devilal promised Moon to farmers and unemployed and it got majority in 1987 Haryana Assembly elections  and then 1989 Loksabha elections were won by Janta Dal . Forced by these election promises , the new V.P.Singh government came with loan waiver scheme  of Rs 10000 ( almost equal to Rs 1 lakh on current price parity ) to all the farmers . Result was that public sector banks hugely suffered because of this action and their weakness subsequently forced the government for allow new private  banks . 

Public Sector Banks were regularly scammed in that period  as there was no computerization of records, so industrialists took loan and never paid them . Farmers were given loan waivers but in absence of private media , the bad publicity did not happen like now   .

Whenever government tried computerization of banks , bank employees and officer associations would go for strikes for days . Under these situations , government opened the banking sector to private and foreign investment and that forced competition to public sector banks by introduction of online and ATM banking  . 

The Grim Scenario

After 30 years , we are again at the same point on Saturn cycle . The old rules , non-coordination among banks , lack of insolvency and bankruptcy  laws allowed the industrialists taking loans from several banks for same assets and banks became helpless as litigation would continue for years and industrialists would form many new companies and continue taking fresh loans . The state governments are again into farmer's loan waivers to win elections . Housing loan defaults are also going to be a major headache for banks in coming years as secure jobs are reducing every year so payment of EMIs will become difficult for salaried class . 

With NCLT and Bankruptcy court verdicts coming out in large numbers in next one year  , banks will have to absorb the losses due to bad debts given in last decade,  which will hit not only their reserves and profits but it will also eat their capital. Therefore , the banking sector is to undergo a mini death and rebirth in next couple of years .

The Silver Lining Due To The Scam

 Just as Harshad Mehta scam in 1990s forced the government to computerize operations of banking and equity markets , the same way the silver lining in this dark period is that banks will be forced to adopt a Blockchain (Bitcoin) kind of technology , along with Aadhaar kind authentication for all companies to remove shell companies. The data about loan sanctioned to any person or company will be  shared across all financial entities , just like CIBIL does for individuals . The individual discretion of bank officials would go as software will decide the loan eligibility, daily report on loan utilization and financial health of the loan availing entities .   

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