CONFESSION OF A BANKER
After spending more than 38 years with Banking Industry I have acquired enough perceptiveness for reminiscing about the idiosyncrasies of the bankers and some of their risible banking practices. Although I have achieved a reasonably envious position in the bank before calling them goodbye, I always remained a non banker. From literature to banking, it was not very easy transition. In no time I realized that there was no place for Shakespeare, Keats or Shelly in the non-romantic world of finance. Had Shakespeare been a banker what kind of poetry he could have written?
Shakespeare, the bard in Twelfth Night:
If music be the food of love, play on
Give me excess of it.
Shakespeare, the banker:
If money gives all that we need in life
Lend me excess of it.
From the beginning of civilization, bankers have acquired quite influential position in the society; it’s because they deal in most sought after thing in the world- money. Some people call them fair weather friends who lend you an umbrella in fair weather and ask for it back when it begins to rain. On the other side bankers can be benevolent lenders who will readily waive tons of loan money on a compromise proposal.
Whether a fair weather friend or a benevolent money lender, a typical banker is seriousness personified. Smiles are kept miles away in the banking environment. Is it the financial burden of the entire Nation that they have to carry on their lean shoulders? Why have they to keep the atmosphere so dreary? I always wondered am I misfit in the arid world of pecuniary transactions? You will agree most of us whatever jobs we are doing these are by chance and not by choice.
Before I joined banking service ‘late sitting’ was very much in vogue. The bankers used to burn midnight oil quite literally. It was often said that in the middle of night when a dog growls and a knock on the door confirms arrival of someone known, it is invariably a banker’s home coming after finishing his day work. The scenario changed with the advent of trade unions in the banking sector. Working late hours began to be compensated with overtime. But this facility was very much misused; the employees got pocketful overtime without actually doing it. Earlier bankers had enjoyed envious status in the social circles. The ‘Agent’, then branch head of a bank used to be an honoured guest at the local social events; he would be offered a chair on the dais along with other dignitaries of town. This privilege did not last long. The image of banks soon started fading in the public eye due to poor customer service and slipshod behaviour of the employees. Mr. Janardan Pujare, the then Minister of state for Finance, became harbinger of misfortune for the banking community. Forcing sweeping changes in the functioning of banks, Mr. Pujare brought untold misery for the easygoing, laid-back employees of banks. Policies were framed to arm-twist banks into lending to the masses under various Govt. Sponsored Schemes without insisting for any security cover. It was a political gimmick where banks became conduit for distributing public money to the deserving and not –so- deserving populace of the country. Loan Melas became order of the day; banks had to do on the spot sanctions in these melas. To add to their woes National emergency strengthened hands of the bank management, any dissidence was handled with stern departmental action. A banker could only pray for return of money lent to the delinquent borrowers.
Oh God, our borrowers pay us back
Govt, Public they all watch with intent,
With focussed eyes on us bankers
Any scent about distressed assets
Or a loan turning bad is enough
To send shock waves to great extent.
It was a known fact that the top management of banks have always favored the directly recruited officers known as Probationers. Probationers are born in the bank with proverbial silver spoon in their mouth and are looked after as sons and daughters–in-law of the bank whereas their cousins who join as assistants are treated with indifference. The bank probationers are highly ambitious species; even at the start of their career they nurture dreams of becoming chairman of the bank. Their not-so-fortunate cousins remain discriminated lot throughout their banking life despite some of them showing marvellous performance far better than a probationer.
Banking may be a serious business but there is no paucity of humour in banking. If you really think nobody cares for you try missing a couple of EMIs. Wise men suggest always borrow from a pessimist banker; he doesn’t expect to be paid back. But don’t be misguided; banks deal in figures not the kind that invokes excitement. About banks’ assets do you know, their assets are another person’s financial burden? Do you ever watch cash flow of your money? It is the movement your money makes as it goes down the drain. And quite funny, bankers write day books but no night books. When it comes to financing, banks work on the principle –‘money attracts money.’ Suppose you have a crore and you want another crore, banks will lend you the crore so then you have two crore and now you want two more. The bank will have no hesitation in financing you further two crore as you have two crore as security.
We can pick up humour even from an ordinary situation of life. One instance I remember when bank’s work was done manually, the job of balancing of Clean Cash Book (main book containing day’s transactions) was assigned to a dependable and, committed employee in the branch. The Clean Cash writer used to be one and only staff in the branch that remained busy 24×7. He was always searching differences in the day’s transactions. Wife of one such Clean Cash writer often complained about her husband’s midnight yelp ‘milgaya, milgaya’. Eureka! He succeeded in locating the difference of a few paise that was left undetected during the day and was tormenting him even in his sleep.
During my induction course in the bank I was taught to treat a bearer cheque with the respect it deserve. I was told that a bearer cheque must be paid immediately to its presenter, even if the presenter is a street dog.
Before emergence of Private Banks there wasn’t much competition amongst the Public Sector Banks; the business was mostly walk-in. Media publicity was not prevalent in the banking sector. Initially Private Banks started advertising in a big way. Encouraged by vigorous campaigning by a Private bank inviting people to open Savings Account with zero balance, a zealous student walked in the bank and expressed his desire to open a joint account with somebody who has money. Another Bank came up with a brilliant ad:
‘Don’t borrow from your friend, borrow from us
You’ll lose your friend, you’ll never lose us.
Good. But it’s unfortunate that the person who writes the bank’s ads doesn’t also approve the loans. Nobody will deny that lending is a major activity of the banks, but it is also true that it is always difficult to borrow from a bank unless one proves that he doesn’t need it.The necessitous borrower agrees to sign all terms and conditions translated by his banker on sheaf of papers. An anonymous poet has aptly depicted plight of the borrower:
If you borrow money
You should be aware
Of the truth about some banks
Lest you fall into their snare.
Stacks and stacks of papers
They’ll thrust into your face
Hoping you won’t read them
Cause the loan’s damn disgrace.
They’ll want your guarantee
Your father’s and mother’s too
And pledge all your assets
I guess that’s what they do
They’ll treat you like a king at first
Smile, pat your back
Until something goes awry
Or falls into a cack.
A borrower may encounter two types of lenders in the bank, a conservative or a liberal one. A conservative banker will not lend you unless he mortgages your soul, the liberal type, however, doesn’t read much into your balance sheet; he rather relies on the ‘man behind the show’ for financing your project.
Banks are now fast adapting to the changing environment, the shift from formula banking to new age banking is quite perceptible. Intense competition amongst the banks has necessitated introduction of relationship concept. The Relationship Officer acts as a natural guardian of the accounts. His prime concern is to keep his HNI (High Net worth Individuals) borrowers in good humour. The high profile customers are entertained at the best of locations in the town. Curiously the bank officials outnumber the customers on such occasions; they entertain themselves more than they entertain their clients. Do I need to mention that liquor flows freely in so called Customer Relation Programmes, the billing, however, will not be for serving hard drinks and the cost will be ‘adjusted’ by whatever means. This is to respect Indian tradition-no booze in the official parties. After all some amount of hypocrisy is permissible in all societies. Despite best customer relations some loans turn bad; these are branded as non performing assets (NPAs). NPAs have volcanic force; they can destroy both the bank and the banker. Do you know that in reality bank’s failure is not caused by NPAs but by the depositors who don’t deposit enough money to cover losses due to mismanagement by the bank officials? The poor banker undergoes three emotional stages at the whiff of a loan tuning NPA.
Concern- that’s when the bank put a limit on withdrawal
Panic – that’s when the bank put a moratorium on limit
Desperation- that’s when the bank calls back TV
Besides NPAs, frauds make life of bankers unbearable. No sooner a fraud is detected tremors are felt far and wide, the Preventive Vigilance Department wakes up from slumber. Frauds may occur with staff connivance or due to ingenuity of the fraudsters. With large scale computerization of banks, the fraudsters have also become Tech Savvy; it’s like cropping up of new disease after the medics find cure for the earlier one. In the good old days most of the frauds were committed by the staff; a Hip Pocket Banker was usually found in every bank. He wouldn’t make out a deposit slip or credit the money in the customer’s account. As such there was no receipt in the bank’s books. If the customer who had made the deposit sent a cheque’ the Hip Pocket Banker will pay the money out of some other account. Sooner or later the Hip pocket banker was always caught because of periodic balancing of books that the banks have to necessarily carry out.
Frauds do occur despite multiple audits in banks by internal as well external audit agencies. In this scenario one person the bankers always remain in awe is the auditor. He is most respected, feared and entertained person in the banking circle although he is the one who arrives after the battle to finish off the wounded.
After NPAs and frauds another favourite and time consuming topic of discussion for the bankers is budget. The word budget is sacrosanct to the bankers as they spend prime time of their lives chasing their budgetary targets. In the in-house meetings several ‘useful’ hours of humanity are lost in the discussions over budgets, those who do not achieve their budget get all the flak and those who have already achieved get more to achieve. The unforgettable part of such meetings, however, is delicious snacking.
Among other major events in the banking history nationalisation of banks in 1969 by the then Prime Minister Mrs Indira Gandhi was one such step that changed the face of Indian Banks. Motive for nationalisation was political as well as economic. It became important tool in the hands of Govt to facilitate development of economy. As the law of diminishing returns applies everywhere the benefits of nationalization started dwindling too over a period of time. Close–door economic policies of the Govt urgently needed a revisit. To keep India on the global economic map in early 1990 Narsimha Rao Govt embarked upon a policy of liberalisation, licensing small number of Private Banks. These came to be known as New Generation Tech-Savvy banks. Axis, HDFC, ICICI Bank all are products of liberalisation. These New Generation Banks started poaching Public Sector Banks’ business by luring customers with assurance of express service by their young staff (svelte and attractive females deployed on the front desks).Competition was on high pitch. Public Sector Banks employees were ridiculed by the public for their inefficient customer service. But the euphoria of Private Banks did not last long. Their poor ‘after sales service’ and high transaction cost discredited them immensely. In the bargain good old Public Sector Banks regained their lost reputation.
Before onset of year 2000 there was one episode that virtually brought the computer run world on its feet, it was popularly known asY2K. The computer wizards were expecting nuclear fission like situation. The banks were also affected by Y2K infection, large scale preparations were made for the fateful night. The total cost of the work in preparation for Y2K is estimated at over 300 billion us dollars. But the bomb did not explode. The year 2000 began like any other year.
Now the new technology has replaced the old banking practices. Taking advantage of technology banks are announcing new schemes every other day to suit requirement of one and all. Merchant Banking, Forex Banking, Net Banking, Online Banking, Investment Banking, Telebanking and perhaps shortly to be introduced Microwave Banking for those who cannot wait. It is jocularly said that the modern banking system manufactures money out of nothing. Well, well! But saying goodbye to the basic principles of banking may be suicidal. We all know about recent fall out of American Banking System due to subprime lending. It led to collapse of big Investment Bank like Lehman Brothers affecting life of millions of investors. It is rumoured that those who lost good amount of money are frantically searching for Lehman Sisters and you know why. Jokes apart, not adhering to the sound and time tested prudential norms of lending are fraught with grave risks for the Banks. Saavdhani hati durghatna ghati .It’s rightly said that good bankers like good tea, can only be appreciated when they are in hot waters.