‘Cow-fraud’ hits Indian banks: Borrowing cows you don’t own, and therefore can’t deliver, to inflate the loan collateral reported to banks. Sounds a lot like the malfeasance Sen. Hatch ascribes to Shorty in questionable securities-lending transactions.
The problem is biggest for India’s retail banks, which are charged with the responsibility of aiding the country’s still-developing agricultural industry by providing loans to farmers in order to allow them to expand their business.
But as collateral on that loan, many farmers are providing their herds of sacred cows – highly valued in Indian society, and frequently used as currency or collateral in a variety of business deals.
Problems are arising for the banks, however, from the tendency of farmers to borrow each other’s cows whenever the bank manager pays a visit, making it look as if their herd is bigger than it actually is, allowing the farmer to obtain a bigger loan.
Only when the money is all gone do the banks realise their mistake.
This has forced the government to take action, with the launch of a scheme to have every sacred cow in the country electronically tagged in order to prevent the cow-fraud from getting out of control.