Villain No. 9: Bhansali & Co

Call it Murder on the Investment Express , all my co-passengers had a hand in butchering me.

I’m only a small-town loser with a small-town perspective. I read fancy ads in pink newspapers and magazines that claimed to predict stock-market movements with perfect accuracy. I didn’t know there’s no one on this planet who can do that—not Warren Buffet, not Peter Lynch. My investment philosophy was simple: if one company offered post-dated cheques and an interest rate of 24 per cent, I chose that over one that gave me only 12 per cent. Of course, the high, investment-worthy ratings helped...helped the Bhansali Brigade, that is.

Hype precedes a fall. So when I heard that Chain Roop Bhansali was given a licence to set up a bank—which the PR agencies chimed up—I thought I was doing a wise thing by putting my retirement benefits into Arihant Mangal, the CRB group’s mutual fund. I asked my sub-broker about the two issues I thought were of supreme importance: one, the incentive I’d get to apply on his form, and two, the unofficial premium on the share. And invested. What I forgot to ask was: is this company for real?

The banking licence was given by the RBI on July 4, 1996—three days after the suspension by SEBI of CRB Mutual Fund ended (something that I somehow missed). Nine months later—just prior to the filing of bankruptcy—the licence was revoked. Why it was given in the first place, I fail to understand. Following the RBI, the credit rating agencies downgraded the bonds of all the CRB financial services companies, saying that the quality of assets had turned sour. In just 12 months? Even SEBI, who I thought was the guardian of investors’ money, exonerated Bhansali. This is what D.R. Mehta, the SEBI chief, said to a leading magazine about the violations in Arihant: "(The offences) were committed during its infancy period."

 Just the other day, I’d gone to the Hoff-land Finance office to get my money. The owner was forthright: he said I’d get my money if my relative was in the income tax department or in the CBI. As I left his swanky office—built with my money—I couldn’t help noticing his fancy  cars—bought with my money—ready to take him to his sprawling bungalow—b.w.m.m—from where he will oversee the battle in court with me—which he’ll fight w.m.m. And win. As did Harshad Mehta, so will Bhansali.

I have been systematically crucified at the altar of greed. Ironically, those who nailed me are the ones with the loudest laments. The first nail was struck by the Bhansali Brigade who truly understood and made the best of the quagmire called the financial system. There were 3,122 auditors, who banged in the second nail by ingenious financial engineering to construct muscular balance sheets out of thin air. The 1,674 merchant bankers slammed in the third nail, by hiding what was to be disclosed and revealing what should have been ignored. The 536 financial advertising agencies screwed in the fifth nail, by designing attractive ads that concealed the fine print. The 97 financial newspapers and magazines conked in the sixth nail by one, wilfully manipulating information to present an investment-worthy picture of companies, and two, by making me a guinea pig for their experiments.The seventh was banged in by the 8,736 brokers who got their high incentives from the Bhansalis, and the routine commission from me.

Of course, I hammered in the last, the most potent nail. I wanted to become a crorepati yesterday. Instead of investing, I speculated. I thought high risk meant high rewards. And you know what? I was right! I took the risk, and Bhansali the reward.