When a nation of freeloaders meets credit culture....

... the result sometimes is not pretty.

Meet the media's latest flogging horse: ICICI bank!

So, the story goes as follows. An honest to God hardworking individual took out a personal car loan. He paid 26 installments, all on time. Then it happened. His financial situation took a turn for the worse. He defaulted on two payments. Just two! Imagine that! All hell broke loose. His car got repossessed and sold.

If you asked the man on the street, nine out of ten times you would hear choice expletives about the bank. Turn the question on its head and ask the same man, how would he like to get defaulted on a loan from him? Chances are he will give you a funny look. How dare you!

Granted that these financial institutions are sometimes using questionable tactics to recover loans. It is also true that even the Police are sometimes hand in glove with the banks, thus grossly abusing their power. However, it is alarming how no one is raising a basic question. Can a bank morally expect its loans to be paid on time? The answer should be a resounding yes.

Yet the media is exploiting popular sentiments by projecting images of money lenders who operate in the unorganized sector. The "victims" of ICICI bank are nothing like the hapless rural debtors who have no choice. Usually these are urban area folks who could not manage their finances well. Quite frequently these people are scam artists or live way beyond their means.

There are three reasons why this is happening. First and foremost, India is hardly an isolated example of financial institutions using goondas to recover loans. Consumers in emerging economies simply do not have enough credit history. There have been credit card crisis in almost all emerging countries - South Korea, Taiwan - you name it. All these countries have resorted to strong arm tactics and perhaps still do. Secondly, silly Government regulations and lack of infrastructure prevents financial institutes from recovering money using legal means. If a bank were to fight out every case of loan default in an Indian court of law, it might as well pack up and leave. Third and perhaps most significant for India, banks are obligated to make politically mandated non-performing loans to certain vote banks. This puts pressure on banks to increase their recovery rates in areas where they can. After all, personal finance remains a cut-throat business. As a side point, lack of infrastructure and institutional support actually prevents these banks to reach out to rural customers, the type who easily fall prey to loan sharks.

In a nation weaned on entitlement for generations, banks like ICICI seem like an ocean, free for the dipping by one and all. People tend to consider bank loan defaults like a victimless crime. If you enjoy a good or service, you got to pay for it. If your future finances are not reasonably secure, you could always take out a loan default insurance. Better still, take the public transport, while you work out a way to make more mullah.

Of course there is a far more sinister side to all this hoopla about ICICI bank while various money lenders in the country continue to use inhuman methods to recoup their loans, such as slavery, bondage etc. A brief look at the history of ICICI bank reveals that this is a professionally run institution, meaning it is not managed by a family. This bank has emerged as the top commercial bank in the country. As a matter of fact, ICICI bank has quite a few women in their top leadership. However, the success of the bank may prove to be its downfall. The political establishment is beginning to discover ways to seek rent from this new windfall. The media is just acting as cheerleaders to a process by which the fortunes of this institution will finally fall into the hands of the only kind of business that survives in socialist India, namely a family run conglomerate.