How Banks will go for a TOSS with JIO’s Success? A worse scenario than FARM loan Waiver is coming soon.
April 26, 17
How
Banks will go for a TOSS with JIO’s Success? A worse scenario than FARM loan
Waiver is coming soon.
Greetings from Hitesh! Yesterday, we dealt
with the very important mistake by individual investors in investing in
fundamentally sound companies and burning their fingers. This is not restricted
to the individuals. Big Guys also makes the same mistakes. It is a pain to see
Indian Banks have made the same mistakes. Let me deal with TELECOM sector.
Debt
in TELECOM sector:-
Cumulative DEBT of TELECOM sector is about
Rs.3.8 lakh crores or more as per some media reports. Debt of Reliance JIO is
Rs.1.8 lakh crores out of this amount. So, on one side there is RELIANCE and
other SIDE there are other PLAYERS who have taken loans.
Now, if Reliance succeed – it will make the
payment of the loans but the other players will be out of the business and they
will not be able to service the loans forget about the repayment.
Conversely, if the reliance fails, which
does not look like, other players will be able to pay but reliance will not be
able to pay!!
Banks are in CATCH 22 position by lending to
TELECOM sectors.
How
BANKS can make such BLUNDERS?
Banks in India or else where in the world
also follows the fundamentals at the time of lending. When they were lending
IDEA – they looked at BIRLA. When they lend to BPL – they looked at BPL group.
When they lend to RELIANCE JIO- they looked at RELIANCE GROUP. At the time of
lending they all were looking fundamentally good and sound.
But over a period of time all BANKERS have
been proved that they do not have the lending skill. They are not TECH SAVVY
and they are not fit for lending.
Why
this happens?
This is happens due to delusion. They look
at the LENDER rather then the FUTURE scenario. I have been observing this kind
of situations in last 30 years and I have always stayed away from investing in
BANKS or NBFCs in 90% of the cases. I have preferred to miss some BANKS or
NBFCs rally rather than burning my fingers looking at their track record.
In the PAST there was a tendency to pay the
loans to save the names. Now a days – chapter 11 is available to the lenders
and in India also they are working towards easing the stress on the lenders.
Their argument is funny. If they support ENTREPRENUERS – overall economy will
grow. I have no objection if PE fund or VC is investing their money in some
START UPS but BANK MONEY is the money of SMALL guys and if they keep on writing
off such a massive debts due to MIS-LENDING – I see a worst situations for India
Banks in coming years.
Politicians use our banks as PERSONAL
FIFDOMS. They keep on waiving the loans for FARMERS. I remember CHIDAMBARAM did
in 2008 and now BJP is doing. (By the way BJP was against this when UPA did
this in 2008). Politicians are making banks loss money and they get the power,
name and fame. I am surprised that nobody has come up with the DATA – that if
the loans were WRITTEN OFF IN 2008 – how come so much new loans have come up in
such a short period of time.
The point is – either BANKS are forced to
LEND or they do not know how to LEND? In both the CASES – I am worried for
BANKS and financial stability of India in the long run. I am also in look out
for the DEBTERS data, who are they, their back ground and what were the general
circumstances that they could not pay the loan?
What
BUFFETT says?
BUFFETT has explained his RATIONALE in a
plain language against investing in BANKING stocks in one of the ANNUAL LETTER
(Incidentally, we are starting a detailed sharing based on BUFFETT LETTERS from
1965 onwards – if you have not registered – you may).
What
NEXT?
If you are investing in BANKS, looking at
their NAMES and TRACK RECORD, you will go for a TOSS. Look at their future
scenario if they keep on lending to TOM DICK and HARRY without having a SKILL
SET to judge the future scenario.
In the ART of WAR, Sun Tzu had said – “If you
know yourself and if you know your ENEMY well, you have nothing to fear for the
RESUTLS of the WAR”.
At Destiny Management we equip our investors
with SELF KNOWLEDGE as well as the GROUND REALITIES as mentioned above. Our
investors are fearless, as they know that they will be winning the BATTLE of
investments.
If you want to win the GAME of investments –
you are most welcome to approach us.
Happy LEARNING.
Live With
Passion…Invest With Passion.
Hitesh Parikh.
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