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Pandemonium: The Great Indian Banking Tragedy
For the past 25 years, Tamal Bandyopadhyay has been a keen student of Indian banking. A lifelong reporter and journalist, he is an award-winning national business columnist and a bestselling author. He is widely recognised for ‘Banker’s Trust’, a weekly column whose unerring ability to anticipate and dissect major policy decisions in India’s banking and finance has earned him a large print and digital audience around the world. The column won Tamal the Ramnath Goenka Award for Excellence in Journalism (commentary and interpretative writing) for 2017. Banker’s Trust now appears in Business Standard, where he is a Consulting Editor.Previously, Tamal has had stints with three other national business dailies in India, and was a founding member of Mint newspaper and Livemint.com. He is also a Senior Adviser to Jana Small Finance Bank Ltd. Between 2014 and 2018, as an adviser on strategy for Bandhan Bank Ltd, he had a ringside view of the first-ever transformation of a microfinance institution in India into a universal bank.Author of five other books, Tamal is widely recognised as a contributor to the Oxford Handbook of the Indian Economy and Making of New Transformation Under Modi Government. In 2019, LinkedIn named him as one of the ‘most influential voices in India’.
640 pages, Kindle Edition
Published November 9, 2020
61 people are currently reading
536 people want to read
About the author
Tamal Bandyopadhyay
18 books56 followersTamal Bandyopadhyay is an Indian business journalist, known for his weekly column on banking and finance Banker's Trust published in Mint, an Indian business daily brought out by HT Media Ltd. He has authored four books namely From Lehman to Demonetization: A Decade of Disruptions, Reforms and Misadventures Bandhan: The Making of a Bank, Sahara: The Untold Story and A Bank for the Buck.
He is popular for his weekly column on banking and finance called Banker's Trust which is published every Monday. His frequent blog Banker's Trust Real Time on livemint.com analyses major developments in the financial sector.
Between April and November 2011, he ran a 32 episode series on Bloomberg India TV, called Banker's Trust, where senior central bankers, commercial bankers, and economists were interviewed every week.
Releasing Tamal's first book, A Bank for the Buck, in November 2012, then finance minister P Chidambaram said, "In a period of great financial illiteracy, it's refreshing to have a book written by somebody very literate about matters relating to finance". In his foreword to the book, former governor of Reserve Bank of India, Y. Venugopal Reddy, wrote, "It's a sort of recent oral history of a financial institution. Tamal has set a new trend in the dissemination of knowledge."
Tamal's second book, Sahara: The Untold Story, details the beginnings and the current day working of the secretive Sahara India Parivar. Well researched, with umpteen interviews with people concerned including Subrata Roy, the book was also cause of a stay order later requested by the Sahara group. In December 2013, the Sahara India Pariwar, moved Calcutta High Court, got a stay on the publication of the book and filed a Rs 2 billion defamation suit against the author and its publisher, Jaico Publishing House.[8] In April 2014, both the parties reached an out of court settlement following which the book carries a disclaimer by Sahara which says, among other things, the book has "defamatory content" --something unprecedented in Indian publishing history, as narrated in Sue the Messenger by Subir Ghosh, with Paranjoy Guha Thakurta. [9]
He has also published a book of poems in Bengali Anupam Meenrashi in January 2014.
He is popular for his weekly column on banking and finance called Banker's Trust which is published every Monday. His frequent blog Banker's Trust Real Time on livemint.com analyses major developments in the financial sector.
Between April and November 2011, he ran a 32 episode series on Bloomberg India TV, called Banker's Trust, where senior central bankers, commercial bankers, and economists were interviewed every week.
Releasing Tamal's first book, A Bank for the Buck, in November 2012, then finance minister P Chidambaram said, "In a period of great financial illiteracy, it's refreshing to have a book written by somebody very literate about matters relating to finance". In his foreword to the book, former governor of Reserve Bank of India, Y. Venugopal Reddy, wrote, "It's a sort of recent oral history of a financial institution. Tamal has set a new trend in the dissemination of knowledge."
Tamal's second book, Sahara: The Untold Story, details the beginnings and the current day working of the secretive Sahara India Parivar. Well researched, with umpteen interviews with people concerned including Subrata Roy, the book was also cause of a stay order later requested by the Sahara group. In December 2013, the Sahara India Pariwar, moved Calcutta High Court, got a stay on the publication of the book and filed a Rs 2 billion defamation suit against the author and its publisher, Jaico Publishing House.[8] In April 2014, both the parties reached an out of court settlement following which the book carries a disclaimer by Sahara which says, among other things, the book has "defamatory content" --something unprecedented in Indian publishing history, as narrated in Sue the Messenger by Subir Ghosh, with Paranjoy Guha Thakurta. [9]
He has also published a book of poems in Bengali Anupam Meenrashi in January 2014.
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Displaying 1 - 22 of 22 reviews
January 29, 2021
Rajan made his famous comment,
'You can put lipstick on a pig but that will not make the pig a princess'
As you start browsing the book, layer by layer it gets so intense as to what all has been happening in the Indian Banking and how the taxpayers money is in the careless hands of some.
What surprised me more was how the bankers failed to pertain basic common sense and how they kept on bluffing that everything was fine and kept on raising fresh loans to keep the balance sheets clean until Rajan blew a whistle on it.
Money was routed into shell companies by forming fictitious loan accounts using software and one of the biggest panics came in the form of Punjab and Maharashtra Cooperative Bank fraud where around 21,049 fake accounts were created by HDIL group.
Also, the role of credit rating agencies came into suspicion when the 'rating shopping' that was being done by low rated companies was busted by the RBI. And the tale goes on & on & on...This book has too much to tell.
I would sum up by saying that Indian Banking is in a hodgepodge that it has created for itself knowingly or unknowingly.
For me, this book was an information capsule that was bitter to digest but needed.
If you're curious to know about this blunder of Indian Banking, this is a must-read. (Also you should have basic economics awareness else you will have to use Google for some terms)
Also, the interviews with four Governors C.R. Rangarajan, Y.V.Reddy, D. Subbarao, Raghuram Rajan was a valuable and delightful read.
'You can put lipstick on a pig but that will not make the pig a princess'
As you start browsing the book, layer by layer it gets so intense as to what all has been happening in the Indian Banking and how the taxpayers money is in the careless hands of some.
What surprised me more was how the bankers failed to pertain basic common sense and how they kept on bluffing that everything was fine and kept on raising fresh loans to keep the balance sheets clean until Rajan blew a whistle on it.
Money was routed into shell companies by forming fictitious loan accounts using software and one of the biggest panics came in the form of Punjab and Maharashtra Cooperative Bank fraud where around 21,049 fake accounts were created by HDIL group.
Also, the role of credit rating agencies came into suspicion when the 'rating shopping' that was being done by low rated companies was busted by the RBI. And the tale goes on & on & on...This book has too much to tell.
I would sum up by saying that Indian Banking is in a hodgepodge that it has created for itself knowingly or unknowingly.
For me, this book was an information capsule that was bitter to digest but needed.
If you're curious to know about this blunder of Indian Banking, this is a must-read. (Also you should have basic economics awareness else you will have to use Google for some terms)
Also, the interviews with four Governors C.R. Rangarajan, Y.V.Reddy, D. Subbarao, Raghuram Rajan was a valuable and delightful read.
March 21, 2021
For an account of the confounding banking industry in India, "Pandemonium" is amazingly readable. The book weaves a compelling story about the Indian Banking industry covering ongoing frauds, NPAs, a savings boom, the RBI flexing its muscles, and government interference.
As I started the book, I was half-expecting this to turn into a political mouthpiece praising or blaming one regime or another. Thankfully, the author steers clear of that while not sugarcoating over proven facts.
To be honest, there is a lot I didn't follow as this is not my core area of expertise. But the fact that even I was able to glean so much about banking in India speaks about how well structured the book is.
As I started the book, I was half-expecting this to turn into a political mouthpiece praising or blaming one regime or another. Thankfully, the author steers clear of that while not sugarcoating over proven facts.
To be honest, there is a lot I didn't follow as this is not my core area of expertise. But the fact that even I was able to glean so much about banking in India speaks about how well structured the book is.
November 21, 2021
PANDEMONIUM: THE GREAT INDIAN BANKING TRAGEDY by Tamal Bandopadhyay is a well written book on the rot in India’s banking system-how promoters easily swapped equity with debt as bank managements looked the other way to protect their balance sheets. That was until Raghuram Rajan took over as Reserve Bank governor in September 2013. And then the RBI started waging a war against ballooning bad debts in 2015.
More than 70% of these bad debts was in the books of the 29 Public Sector Banks, which were either wholly owned or majority held by the Government of India. So what ails India’s public sector banks, the backbone of India’s financial system? Is it Government ownership or the way this owner actually behaves? It probably is the latter. 14 big banks were nationalized in 1969 by the Government-and there the problem started. The Government treated these banks as their fiefdom and policies were framed, which no self-respecting commercial baker would touch with a bargepole. Called the priority sector loans-extended to poor people-who neither had the capacity nor the inclination to repay. Hence 80% of these loans became bad and had to be subsequently written off. To save the banks, the government floated a Credit Guarantee Scheme, an insurance model, where the insurer a.k.a. Government reimbursed bad loans to the extent of Rs.1 lakh per account on payment of a small premium which used to be deducted from the borrower’s loan. In the current scenario priority sector has been replaced by MSMEs but the policy is more or less the same. Due to Basel II/III norms, provisioning for NPAs is strictly enforced and the bank balance sheets are in a slightly better shape than in the seventies of the last century. This has been the story of PSBs for the last 50 years as the banks and promoters gamed the system. But when the RBI started tightening the screws, these banks found that provisioning for NPAs steeply eroded their net worth (in some cases it became negative) and the primary shareholder the Government had to bail them out by infusing fresh capital to cover the provisioning and enable the banks to start lending again.
Repeated re-capitalization by the government bloated the fiscal deficit and was not a long-term solution. Between 1993-94 and 2019-20 the Government has infused Rs.412,816 crores (Rs.41.28 trillions) as recapitalization in PSBs, all these were taxpayer’s money which could have been better utilized. In search of solutions, two options were feasible -merger of two or more Public Sector banks to form bigger banks and/or to privatize PSBs. However, in 2018, the soft underbelly of private sector banks was exposed-Chanda Kochar CEO of ICICI Bank Limited with a 35 year career in the bank and Rana Kapoor CEO of Yes Bank Limited-exposed their greed and lack of ethics. In granting loans that would end up as NPAs or were granted for quid pro quo (corruption) without following prudential norms for lending. As far as merger and consolidation of PSBs were concerned, the Government had merged 13 PSBs creating 5 mega-banks, but we are still awaiting the results of this experiment.
In the last chapter of the book The Way Forward the author concludes: “At the end of this book I am still seeking an answer to a question: Has India let down its banking system or, is it the other way round? Probably the blame should be shared.
The banking regulator could have encouraged competition by allowing many more banks to set up shop. It has not done so and hence, financial repression continues. The banks too have not explored the phenomenal opportunities that the world’s second most populous nation offers.
There are millions of borrowers and savers in the hinterland of India but very few banks seek to identify and exploit the business opportunities there. Some banks go there only under compulsion; while others stay away. Everyone ends up losing as a result.”
The book has been well written and gives a bird’s eye view of Indian banking. It clearly explains contemporary India’s challenges and economic potential. Using a simple language sans jargon, the reader clearly understands the situation and is a must read for people interested in the current economic scenario in India.
I really enjoyed the book.
More than 70% of these bad debts was in the books of the 29 Public Sector Banks, which were either wholly owned or majority held by the Government of India. So what ails India’s public sector banks, the backbone of India’s financial system? Is it Government ownership or the way this owner actually behaves? It probably is the latter. 14 big banks were nationalized in 1969 by the Government-and there the problem started. The Government treated these banks as their fiefdom and policies were framed, which no self-respecting commercial baker would touch with a bargepole. Called the priority sector loans-extended to poor people-who neither had the capacity nor the inclination to repay. Hence 80% of these loans became bad and had to be subsequently written off. To save the banks, the government floated a Credit Guarantee Scheme, an insurance model, where the insurer a.k.a. Government reimbursed bad loans to the extent of Rs.1 lakh per account on payment of a small premium which used to be deducted from the borrower’s loan. In the current scenario priority sector has been replaced by MSMEs but the policy is more or less the same. Due to Basel II/III norms, provisioning for NPAs is strictly enforced and the bank balance sheets are in a slightly better shape than in the seventies of the last century. This has been the story of PSBs for the last 50 years as the banks and promoters gamed the system. But when the RBI started tightening the screws, these banks found that provisioning for NPAs steeply eroded their net worth (in some cases it became negative) and the primary shareholder the Government had to bail them out by infusing fresh capital to cover the provisioning and enable the banks to start lending again.
Repeated re-capitalization by the government bloated the fiscal deficit and was not a long-term solution. Between 1993-94 and 2019-20 the Government has infused Rs.412,816 crores (Rs.41.28 trillions) as recapitalization in PSBs, all these were taxpayer’s money which could have been better utilized. In search of solutions, two options were feasible -merger of two or more Public Sector banks to form bigger banks and/or to privatize PSBs. However, in 2018, the soft underbelly of private sector banks was exposed-Chanda Kochar CEO of ICICI Bank Limited with a 35 year career in the bank and Rana Kapoor CEO of Yes Bank Limited-exposed their greed and lack of ethics. In granting loans that would end up as NPAs or were granted for quid pro quo (corruption) without following prudential norms for lending. As far as merger and consolidation of PSBs were concerned, the Government had merged 13 PSBs creating 5 mega-banks, but we are still awaiting the results of this experiment.
In the last chapter of the book The Way Forward the author concludes: “At the end of this book I am still seeking an answer to a question: Has India let down its banking system or, is it the other way round? Probably the blame should be shared.
The banking regulator could have encouraged competition by allowing many more banks to set up shop. It has not done so and hence, financial repression continues. The banks too have not explored the phenomenal opportunities that the world’s second most populous nation offers.
There are millions of borrowers and savers in the hinterland of India but very few banks seek to identify and exploit the business opportunities there. Some banks go there only under compulsion; while others stay away. Everyone ends up losing as a result.”
The book has been well written and gives a bird’s eye view of Indian banking. It clearly explains contemporary India’s challenges and economic potential. Using a simple language sans jargon, the reader clearly understands the situation and is a must read for people interested in the current economic scenario in India.
I really enjoyed the book.
April 14, 2021
Pandemonium : The literal meaning of this word is wild and noisy disorder or confusion; uproar- a situation in which a crowd or people act in wild, uncontrolled, or violent way because they are afraid, exited or confused. This word was coined by John Milton in his poem Paradise Lost.
Indian Banking is in terrible shape at present and Pandemonium is perfect word to describe its current state of affairs. Problem looks simple that banks have given money and large corporate borrowers are not paying back. Underlying complexities of this classical banking problem is brilliantly narrated by journalist Tamal Bandyopadhyay in “Pandemonium: The Great Indian Banking Tragedy”. Author has brilliantly covered 360 degree perspective of problem. Root causes of current NPA problem, RBI's or more specifically Raguram Rajan's aggressive war against NPA, crisis of NBFCs, rotten Rating Agencies, core problems of PSBs, Fear Psychosis among bankers for three Cs…CVC, CBI and CAG, case studies of famous or infamous fall of banking giants, interview with four former RBI governors, nuance of newly enacted Insolvency and Bankruptcy Code, role of RBI as regulator and its shortcomings and way forward in Indian Banking, all this subtly narrated with deep insight, anecdotal story telling, statistical proofs and wisdom of veteran financial journalist. Painful and fascinating read.
Indian Banking is in terrible shape at present and Pandemonium is perfect word to describe its current state of affairs. Problem looks simple that banks have given money and large corporate borrowers are not paying back. Underlying complexities of this classical banking problem is brilliantly narrated by journalist Tamal Bandyopadhyay in “Pandemonium: The Great Indian Banking Tragedy”. Author has brilliantly covered 360 degree perspective of problem. Root causes of current NPA problem, RBI's or more specifically Raguram Rajan's aggressive war against NPA, crisis of NBFCs, rotten Rating Agencies, core problems of PSBs, Fear Psychosis among bankers for three Cs…CVC, CBI and CAG, case studies of famous or infamous fall of banking giants, interview with four former RBI governors, nuance of newly enacted Insolvency and Bankruptcy Code, role of RBI as regulator and its shortcomings and way forward in Indian Banking, all this subtly narrated with deep insight, anecdotal story telling, statistical proofs and wisdom of veteran financial journalist. Painful and fascinating read.
August 29, 2021
Pandemonium can well be called The Great Indian Banking Comedy than Tragedy. It is a well researched account into the banking industry of India. With ringside view of important topics, the book is divided into 6 parts. With the first part talking in detail about NPA issues, PNB scam, Yes Bank failure, ILFS default and the role of rating agencies, Tamal provided a correlation amongst all these to the current banking conundrum. The second part concentrates on PSB's, their governance issues, issues related to consolidation and tax payers money used for recapitalisation. Part three refers to fear psychosis in the Indian Banker. With bankers being hauled up for investigations, the common banker is afraid of reputational loss and with hunting and hampers genuine risk taking decisions. The author stresses the need to separate business decisions gone wrong with those made with fraud intent. Part 4 are detailed interviews with formed RBI governors Rangarajan, YV Reddy, Subbarao and Raghuram Rajan. Subbarao and Rajan's interviews are particularly frank and insightful. With discussions related to divestment, role of RBI and the conflict between RBI and government, the fifth part is discussion for possible way forward. The sixth part are visual charts and tables talking clearly about Elephant in the room. Highly recommended for people working in Finance and Banking.
January 24, 2021
Great book to get deep insights about the overall banking system. Step by step record of what happened behind the scenes, how a particular fraud started and became so big and eventually come out, things which are troubling the banking system, the tussle between the RBI and the government, things that RBI didn't do well, things where government took bad decisions or even continuing doing so, this book exposes everyone involved in this ecosystem. You will really understand why RBI, or SEBI or the government made statements out in public that everything is okay. Things are definitely not okay and the entire industry is in deep waters.
Great respect for the author who made this difficult subject feel like we are reading an easy to understand novel.
Great respect for the author who made this difficult subject feel like we are reading an easy to understand novel.
April 14, 2021
I had some commitments otherwise this book wouldn't have taken so much of time.
It cannot be categorised as history as the events are still unfolding nevertheless it gives a detaied account of issues plaguing banking industry.
Previous 4 RBI Governor equivocally put the blame on UPA for same but then onus on NDA for neither being able tp solve it but also let it fester.
My opinion is also same though. The insights book throws are amazing and must be appreciated that in economics things are mostly related and causal effects are tough to figure and may have long term effects.
I would recommend this book to everyone who would like to habe deep understanding of Indian Banking Industry and reasons of slow down offlate of Indian economy.
It cannot be categorised as history as the events are still unfolding nevertheless it gives a detaied account of issues plaguing banking industry.
Previous 4 RBI Governor equivocally put the blame on UPA for same but then onus on NDA for neither being able tp solve it but also let it fester.
My opinion is also same though. The insights book throws are amazing and must be appreciated that in economics things are mostly related and causal effects are tough to figure and may have long term effects.
I would recommend this book to everyone who would like to habe deep understanding of Indian Banking Industry and reasons of slow down offlate of Indian economy.
December 16, 2020
One word BRILLIANT. It is just not a book it is treatise on banking industry. Meticulous research backed by numbers which are unquestionably accurate. As a rule I am not a great fan of journalists writing and commenting on varied subjects, specially in India. However this author is an exception particularly in this instance. He is clear about the subject does not show any bias compliments where deserved , shows warts and faults where evident. The book makes a very absorbing read, never a dull para or page. Thank you it made a very enlightening read.
February 13, 2022
A fastidious narration of what transpired in the banking sector pre and post the global financial crisis. What led to the irrational exuberance and unflinching belief in the future despite the contrary indicators. Though it is a retrospective tale ,it brings to fore how much goes unnoticed in this vast interconnected web of human economic exchange.
A thriller for anyone observant of Indian economy in particular and economy in general.
A thriller for anyone observant of Indian economy in particular and economy in general.
January 28, 2021
Very detail description of the current banking scenario. Although there are lot of banking cases I was not aware of, it was still fun getting to read from Tamal Bandyopadhyay wonderful presentation. I liked his first book, so I picked this book. Now, thinking of reading all his books. He is truly a good story teller.
January 8, 2021
A terrific read! it is a must read for anyone in the banking/finance profession. The chapters on the recent scams were so riveting. Reading about the bankers prosecuted for sanctioning loans was sad.
February 16, 2021
The key purpose of journalism is to inform,educate and enlighten the public on every issues.Tamal Bandyopadhyay’s significant work on Indian banking tragedy is a ‘public service’ in the words of U.K Sinha(former SEBI chairman).
March 12, 2021
A must read for all those associated with Indian banking - employees, regulators, auditors. If you are one of them, you cannot miss reading. It is a must part of "mandatory reading" for any CA, MBA.
May 16, 2021
The author does a great job of simplifying seemingly complex topics. As someone who is a novice in this field, I thoroughly enjoyed reading this book. Read this one after hearing the author’s interview on Amit Varma’s podcast.
May 21, 2021
It covers Indian banking pre and post R. Rajan. Some sections are repeating and it would have been omitted. Chapters are lengthy and we need passion to read. Otherwise book is good and person who wants to know about politics in the banking should read it. I give 5 star
June 29, 2021
Excellent chronicle of the events of last decade in Indian banking. I wish every banker and policy maker reads it. The complexity of events one after another in the financial sector is laid bare with excellent writing by Tamal. Always a pleasure to read his articles and books.
August 27, 2022
A great read covering Indian Banking, Central Bank, NBFC's over 2-3 decades. Each event in banking history including bad loans, Kochar Gate, Yes Bank failure has been covered in Vivid Detail.
It shares insights what happened inside and what kind of tradeoffs were made.
It shares insights what happened inside and what kind of tradeoffs were made.
February 20, 2021
The author of this book has been interviewed in a podcast called “The Seen and The Unseen” by Amit Varma. Listen to that interview. It is better than reading this book.
April 19, 2021
Brilliant narrative!! , thoroughly researched , holistic view. A thought provoking book.
This entire review has been hidden because of spoilers.
October 16, 2021
Gives a good overview of banking sector from author's perspective. It is crisp yet elaborate & critical yet informative. It would surely add more dimensions to your own perspective on this sector.
October 28, 2023
Good subject. But very poor writing.
The governor articles are good.
The governor articles are good.
August 20, 2023
An interesting book on problems of banking in India.
Displaying 1 - 22 of 22 reviews