Transparency International has reported that Indians paid US $584 million in bribes to the lower judiciary last year, and 36% of Indians admit to having bribed the judiciary. Civil cases take decades to be heard, and the case backlog is enormous - there are 25 million cases pending in about 13,000 subordinate courts. In 1999, it was estimated that even if no new cases entered the system, at the current rate of disposal of cases, it would take 350 years to clear the backlog. I read recently of a murder case in India where the father of the victim was still waiting for the killer to be convicted 24 years after the crime, and wondered if he'd see justice in his lifetime. No doubt, there are many systemic problems - perhaps there are too few judges and the judges are underpaid - yet, I believe that the quality of a judicial system is determined primarily by the quality of the judges (just as the quality of a school being determined primarily by the quality of its teachers). And the quality of judges is going downhill.
The process of selecting judges has been waylaid by the rich and the influential. Especially the lower judiciary contains many judges who were either the children of judges, or had enough money to bribe their way in. It is not uncommon for the interview-panel that selects judges to ask for money during the interview (In the northern state of Punjab, such a bribery scandal was unmasked in 2002 and judicial appointments for the preceding two years were annulled). The candidate's score on the interview is often based on the amount of the bribe, or the amount of influence the candidate has. Children of judges with law degrees from third-rate law-school often clear the judicial examination with ease.
The quality of judges has a ripple effect on the legal system. Meritoriously selected judges would hold themselves and those around themselves to a higher standard. For example, the success of attorneys in India is largely dependent on their personal relationship with judges - a practice that flourishes because incompetent and unprofessional judges promote it. Meritoriously selected judges would discourage such practices.India needs to raise the quality of judges entering the judiciary - Indians deserve a better deal than the bribery, corruption and delay the current judicial system dishes out.
Thursday, March 29, 2007
Wednesday, March 28, 2007
Brash New Indian Banks
I have many uncles who work in the banking sector in India. They work for the "old" public-sector banks, as opposed to the new private-sector banks like ICICI Bank and HSBC Bank. Whereas the new banks have computerized operations, online banking and spiffy infrastructure, most old public-sector banks are still mired in bureaucracy and are only slowly, painfully modernizing their operations. One of my uncles mentioned that it felt like he was on a bullock-cart watching the "new banks" whiz by on motorcycles and cars.
It's hard to imagine why any young professional would choose a public-sector bank over the new banks. ICICI Bank ATMs are ubiquitous - every city has one. In Mumbai, you can ask the cab-driver to take you to the nearest ICICI ATM and he'll do so.
But I'm not sure that the new brash banks are a wholly positive development. The last two times I have been to India, I have been surprised by the numerous advertisements of FM radio for "personal loans". New banks like ICICI Bank have led the expansion of this market-category. While commonplace in the USA, this is a radical development in India. Unlike the USA, India doesn't have a strong enforcement infrastructure for credit-ratings and loan-recovery. It is easier to default on a loan and disappear. India, traditionally has also had a strong savings ethic, which seems to be slowly disappearing - first came consumer-goods on installments, and now we have "personal loans". The result is a flood of easy money that must be partly responsible for the roughly 5% inflation and meteoric asset prices.
I worry that these new banks, in their eagerness to conquer market-share, have recklessly executed unstable monetary stategies. Rumor on the street this time in India was that India's federal bank (RBI) had to raise interest-rate on savings-deposits to prevent ICICI Bank from collapsing because ICICI Bank had too many bad loans.
Tailpiece:
My neighbor's nephew worked for HSBC Bank, another one of the new banks. The nephew was working late one night when the guard's gun accidentally went off and shot him in the stomach. He died shortly thereafter in the hospital. When I mentioned this to one of my aforementioned uncles - he pointed out that this would never happen in his public-sector bank which has safety precautions for exactly such a scenario. Once the bank's money is placed in the vault at the end of business hours, the guard's gun is also placed under lock and key - the rationale being that once the money is in the vault, the guard doesn't really need his gun. This is yet another case of the new banks having lost some of the wisdom of these older, more mature banks. I wonder if HSBC ever instituted an inquiry into this incident and came up with any safety measures?
It's hard to imagine why any young professional would choose a public-sector bank over the new banks. ICICI Bank ATMs are ubiquitous - every city has one. In Mumbai, you can ask the cab-driver to take you to the nearest ICICI ATM and he'll do so.
But I'm not sure that the new brash banks are a wholly positive development. The last two times I have been to India, I have been surprised by the numerous advertisements of FM radio for "personal loans". New banks like ICICI Bank have led the expansion of this market-category. While commonplace in the USA, this is a radical development in India. Unlike the USA, India doesn't have a strong enforcement infrastructure for credit-ratings and loan-recovery. It is easier to default on a loan and disappear. India, traditionally has also had a strong savings ethic, which seems to be slowly disappearing - first came consumer-goods on installments, and now we have "personal loans". The result is a flood of easy money that must be partly responsible for the roughly 5% inflation and meteoric asset prices.
I worry that these new banks, in their eagerness to conquer market-share, have recklessly executed unstable monetary stategies. Rumor on the street this time in India was that India's federal bank (RBI) had to raise interest-rate on savings-deposits to prevent ICICI Bank from collapsing because ICICI Bank had too many bad loans.
Tailpiece:
My neighbor's nephew worked for HSBC Bank, another one of the new banks. The nephew was working late one night when the guard's gun accidentally went off and shot him in the stomach. He died shortly thereafter in the hospital. When I mentioned this to one of my aforementioned uncles - he pointed out that this would never happen in his public-sector bank which has safety precautions for exactly such a scenario. Once the bank's money is placed in the vault at the end of business hours, the guard's gun is also placed under lock and key - the rationale being that once the money is in the vault, the guard doesn't really need his gun. This is yet another case of the new banks having lost some of the wisdom of these older, more mature banks. I wonder if HSBC ever instituted an inquiry into this incident and came up with any safety measures?
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