The Guardian ed­i­to­r­i­al "Probe CL Fi­nan­cial col­lapse" (Jan 30) men­tioned three caus­es iden­ti­fied by the Cen­tral Bank Gov­er­nor for the col­lapse. In sim­ple lan­guage the caus­es were that CL Fi­nan­cial was lur­ing de­pos­i­tors with promis­es of in­ter­est rates which were ex­ces­sive, us­ing its as­sets to bor­row mon­ey be­yond their val­ue, and trans­fer­ring mon­ey from one com­pa­ny to an­oth­er with­out ad­e­quate safe­guards. In fact these are the very rea­sons ad­vanced by the Min­is­ter of Fi­nance for not bail­ing out the Hin­du Cred­it Union. Of course the jar­gon utilised is so con­vo­lut­ed that any num­ber of in­ter­pre­ta­tions are pos­si­ble. What is in­con­testable is that wealthy in­vestors had no mon­ey in the HCU, and none of the HCU in­vestors had enough clout with the Gov­ern­ment to in­flu­ence a bailout.

There is one les­son that has been learnt, that is, that if you want to se­cure the fi­nan­cial strength of your in­sti­tu­tion you must en­sure that you are able to at­tract in­vest­ment from peo­ple with in­flu­ence. No oth­er lessons have been learnt, if you con­sid­er that there is no ev­i­dence that the mon­i­tor­ing and over­sight of fi­nan­cial in­sti­tu­tions are more strin­gent than be­fore. CJ Fi­nan­cial has been treat­ed as an aber­ra­tion. No oth­er in­sti­tu­tion has ad­mit­ted to any such mis­fea­sance and the reg­u­la­tors show no greater con­cern for op­er­a­tions in the fi­nance sec­tor than be­fore. The Guardian's call will re­main a voice in the wilder­ness, be­ing giv­en lit­tle re­gard be­cause ac­count­abil­i­ty is for­eign to our so­ci­ety.

Karan Ma­habirs­ingh

Chase Vil­lage