stock markets to disastrous consequences jugaad yes lending nothen we had development finance institutions the budget gave them money and they lent to businesses they appraised these institutions were earnest to begin with but began to rot all of us know stories of over invoiced imports fake project reports and jokes about how the borrower came in a scooter to submit a loan application and drove in with an imported car to declare bankruptcy we ended this charade in 1991 if you are reminded of ilfs at this stage cant blame youall the wise men who wrote superb reports we students of finance in the 1980s studied asked for markets to be liberalised we did not have much hope those were the days when the fm conducted loan melas and gave away loans designed to default enterprising villagers created a market for what were called loan cows outside these melas they collected a rent for parading this cow before the minister to get a loan we have always been enterprising it is just that we cant raise capitalthe private banks offered a ray of hope they were listed and the incentives to keep the book clean was high some did well and continue to do well but those that failed created a huge trust deficit and depleted the social capital of the segment return to the third item on our list collusion and corruption killed many of our institutions they lent to well connected crony capitalists they hid bad loans in plain sight nope we dont know how to lend rightwhat if we returned to the local relationship model we created a model of lending to small farmers through cooperative banks we created micro finance organisations that could lend to self help groups we enabled nbfcs to lend to small businesses but we failed in all casesthe cooperative banks were usurped by local politicians the micro finance businesses made it a commission business of taking priority sector credit from banks and overlending them aggressively to show growth and failed the nbfcs mounted scam after scam refer to point number three from ilfs to sahara yes bank to pmc we fritter money because we collude and loot we dont lendamidst all this we have brokers and fixers sellers and liars and arrangers who will get a loan sanctioned for a commission debt funds are just small boats caught in this high sea juggling institutional investors competitive selling with credit structuring and suddenly finding that daily nav and expenses are at risk when large investors leave without a transparent market that product is a tough onecan we fix this one mr ht parekh knew how to fix it he created a fine institution that only focused on the science and art of lending one mr talwar knew it he stood up to power fearlessly for his right to lend we have just lost that institutional and personal integritythe writer is chairperson centre for investment education and learning