Recent years have seen three crises that have involved common people. The first was the 2006 micro-finance crisis in Andhra Pradesh, which led to legislation in 2010. After that, micro-finance in Andhra Pradesh has largely passed into the hands of institutions that get their funds from banks; its adequacy is quite unknown. The second is the long-running Sahara crisis. Sahara India Financial Corporation was ordered by the Reserve Bank of India in 2008 to repay all deposits by 2015. Then, in 2011, the Securities and Exchange Board of India ordered two of its other companies, Sahara Real Investment Corporation and Sahara Housing Investment Corporation, not to issue any more capital, and told the public not to complain to Sebi if SRIC and SHIC did not repay their deposits: in effect, it told them that the two Sahara companies were untrustworthy. It also told the two companies to repay all their optional fully convertible debentures. Sahara was of the opinion that the OFCDs were so designed that they were not subject to Sebi’s regulation. The dispute went to court and ended up in the Supreme Court, which asked the two corporations last August to deposit Rs 24,400 crore in a bank and repay it to depositors.

In March, Sahara said that it had paid off most depositors and had money to repay the rest. Sebi said it was not convinced, and filed a contempt petition against Sahara. Recently, the Supreme Court supported Sebi and passed severe strictures (a term which must be used for intemperate remarks when they are made by the Supreme Court). Then in April, Saradha Group of Calcutta stopped repaying deposits. Sudipta Sen, the promoter, and Debjani Mukherjee were traced to Kashmir, arrested and brought to Calcutta, where the intelligence bureau of the state government is looking for their improprieties. The purpose here is not to argue in favour of any of the culprits. They are rich enough to hire the best lawyers. But certain features are common to all these scandals.

First, it is impossible to know what the culprits’ case is; everyone, from the Supreme Court to the governments to the media, agrees implicitly that the culprits are at fault and must be punished. Second, the enforcers do a fairly good job of pursuing the culprits. But they not only do not protect those poor people who gave money to the culprits; the idea does not even enter their heads. Third, even the ignorant poor know that banks are safe and private borrowers are not. The banks have energetically endeavoured for years to achieve financial inclusion. Still, the poor flock to those whom everyone else in this country unanimously believes to be scamsters. Yet, no one asks why the poor think so differently from the non-poor. Finally, whatever the non-poor think, the poor will continue to make risky investments. Can the non-poor think of nothing better than RGESS for them?