Thoughts & Ideas

Thursday, July 31, 2008

Memorable Experiences with SBI a Post Script

About 2 months after I wrote to the Chairman of SBI, the bank very kindly arranged to pay the shortfall by way of a cheque.

However, they neither acknowledged my letter nor answered to my letters.

Thank God for small mercies!

Monday, July 21, 2008

Some Thoughts on the Strange case of the Dabhol Power Company (DPC).

With India facing critical and crippling shortage of power on one hand and at the same time having the capital assets of DPC lying idle, it was essential to restart this power plant. It is however debatable whether the actions taken by the GOI and the FIs were in the best interests of the country, its people, and fundamentally in safeguarding the sovereign status of the nation.

All standard text books of economics and business (even American ones) state that equity holders provide the risk capital in any business and stand last in line in receiving the benefits (if any) in functioning of the enterprise. It is therefore surprising that the proposal to restart DPC also envisaged payment of USD 305 mio (approx. Rs. 1342 crores) to the equity holders of this ill fated company. The equity holders GE & Bechtel acquired this equity stake from Enron after the latter company was wound up.

The revival of DPC involved compensating various parties, including the equity holders, on account of the guarantee given by MSEB which was counter guaranteed by GOI. As such, it seems that GOI was willy-nilly obliged to keep up its promises if it desired to maintain its respectability in the world forum. This also made the US based stake-holders in DPC claim that India should “uphold their legal rights and abide by international obligations”.

Now, basic contract law states that any agreement is voidable in case the agreement has been arrived at, inter alia, through fraud or coercion. As such, the GOI would have been well within its rights to repudiate its commitments under the counter guarantee since the guarantee was obtained by both fraud and coercion, and evidence to both is available in the public domain.

Fraud can be established by insisting on details of payments made to Indian politicians and bureaucrats as mentioned in the audited financial statements of Enron Ltd., being made public. And coercion is clearly indicated if one refers to Joseph Stiglitz’s, “The Roaring Nineties”, Chapter 10 - Enron, Page 259, where he states that “Why had the Indian government signed the contract when it could get electricity at better terms elsewhere? Part of the answer was: the United States put on political pressure. Enron officials joined a cabinet trip to India, and direct pressure was put on India by the American ambassador”.

It was therefore incumbent on the GOI, if it was to uphold its duty to the Constitution of India of maintaining India’s sovereignty, to have repudiated the counter-guarantee and unilaterally nationalise the assets of DPC. There were risks in taking such action, but the only way to handle bullies is to call their bluff. The Indian Government preferred to take the softer stand and paid off the bullies and the assets of DPC were taken over by the Ratnagiri Gas & Power Pvt. Ltd. How much power the company is generating now 3 years after is there for everyone to see!

We see the same drama being played out again in the Nuclear Power Deal.

Tuesday, July 08, 2008

Some Memorable Experiences with SBI

I recently wrote to the Chairman of State Bank of India, India's largest bank, in the fond hope of getting a reply. I did not even receive an acknowledgement. Maybe I was wishing for the moon. I had taken quite some time and effort in writing this so for my personal pleasure I am putting it on my blog.

The Chairman
State Bank of India,
Corporate Centre, Nariman Point, MUMBAI.

Dear Sir,

Some Memorable Experiences with SBI

While watching the wonderful advertisements being put up by SBI on TV and the print media I was prompted to pen my own very memorable interactions with your esteemed organization, which are enclosed.

These memorable experiences relate to two different branches of your hallowed institution but I request you to please feel confident in believing that they are very representative of the exalted service levels on offer.

With kind regards,

Sushil Prasad


Day 1: I approach SBI branch and introduce myself as the nominee (jointly with my sister) in case of the various accounts held by my late mother at their branch. As such, I request to be advised as to procedures for getting the deposits released to us.

I am advised that Bank’s computer does not show that nomination papers have been filed so I should take a walk. The computer records do not show nomination and nothing else can be done. No amount of requests and entreaties to check the Bank’s records make any difference. Lord Shiva would have come down from Mount Kailash but absolutely no effect on SBI staff.

No one is even willing to explain as to what would be the alternative other than “get succession certificate from court”. I spend the next one and half days running around to find a lawyer who would help in getting a succession certificate. Meanwhile the thought of coordinating with 8 legal heirs living all across the world gives me nightmares.

Day 3: With this profound dilemma on my hands, I spend some of my evening hours sorting out my mother’s papers and diaries. Eureka, Eureka, I find a piece of paper in her hand-writing mentioning that she had submitted nomination papers on a particular date to a certain named official of the branch.

Day 4: Next day I confidently go to the branch assuming that I have solved my problem. Branch officials are not impressed at all. This scrap of paper means nothing to them. If I were actually the nominee I should come with the acknowledgement issued by the Bank while submitting the nomination papers. If I don't have it, I should take a walk (naturally to oblivion).

Day 5: Weekly holiday of the branch

Day 6 & 7: I spend the next 2 days tracking down the official named in that scrap of paper who my mother seemed to have trusted with the nomination forms. I am initially informed that he has since been transferred. But my luck holds and I am able to not only trace him but also find out his cell phone number (thanks to a very kind colleague of his). He responds to my call on his cell-phone on the second attempt and I explain my position to him (very very apologetically). SBI is not short of good kind men (and women). He immediately recalls my mother (even though she had not been visiting the branch lately) and while not recollecting the particular incident (submission of nomination papers to him which happened at least 6 years ago), informs me that if the papers had been submitted I should check the file containing the nomination forms or the nomination register. I thank him from the bottom of my heart.

Day 7: I return to the concerned official with this piece of information. I am told to wait. After about an hour, he is able to locate the nomination register, but the register lacks an index and he is too busy to search for it page by page (it's a thick register).
I plead with him to let me leaf through the register and that he should trust me not to run away with it or otherwise harm it in anyway.

Finally he accedes to my request and hands me the register. I am rewarded within half hour spent leafing through it with the entry of my mother’s name listed along with details of all her three accounts and my name (along with my sister) as nominees. Incidentally date on which the nomination details are written down in the register is at least 3 years after it was originally submitted. I whisper to myself the slogan which is ubiquitous on all major roadways – “Better Late Than Never”.

I am jubilant and a small wane smile also hesitatingly creeps on the face of the official. He asks me to wait for some time. After another hour of waiting I am given the required forms and left on my own to figure things out. Well I have handled much more complex issues and am confident of handling these forms.

Day 8 & 9: It takes me 2 whole days completing the paper work. Not the least was getting indemnity from 2 existing account holders. What was I to do if I did not know 2 existing account holders – I don't know and in my present situation would also not like to dream.

Day 10: The paper work completed I go and submit the forms with a new request, which I think is quite simple. I also feel that my request would reduce the paper work involved and so should be welcomed by the bank staff. The request is that instead of issuing banker’s cheque for paying the funds in the accounts, the payment could be transferred to my existing account with SBI, albeit at a different branch (and hasn't SBI spent a fortune on CBS). I have also got my sister (and co-nominee’s) agreement to the arrangement. But rules are rules and SBI rules say that payment in case of deceased accounts should be by way of banker’s cheque. I accept the verdict (Do I have a choice?).

I am told that processing the papers would take at least 3 days. My 2 weeks leave is nearly up and I am desperate. I don't know as to by when I would be able to come to Banaras again and I am keen to complete at least this one work. I have spent most of my time running to SBI and all other personal works have been left pending. I approach the Branch Manager once again with request to expedite the payment. The almighty is beneficent and agrees to get it done in 2 days and directs me to come the next day.

Day 11: I am there at the branch by 12 noon, hoping to pilot the papers so as to ensure early resolution. I spend time till 4 pm doing this. Finally, I am handed 3 banker’s cheques representing proceeds for the 3 accounts maintained by my mother. All the 3 cheques have different names of the payees. By this time I am absolutely seething – ready to burst. I barge into the Branch Manager’s lovely air-conditioned chamber and point it out to him. His most exalted highness calls for his messenger who comes after 15 minutes. The messenger is directed to summon the concerned official who arrives within 5 minutes and who in turn is directed to carry out the corrections. I am asked to wait outside. Finally at about 5 pm I get the rectified cheques (they have to be seen to be believed – with round stamps and corrections galore on each of the 3 cheques).

Day 12: I now have to open a fresh bank account in the joint names of my sister and myself to encash the cheques. But that is my problem.

A couple of weeks later: Since I am an ungrateful and thankless creature and bent on finding mistakes, a couple of weeks later I write to the branch manager with another request. I have come to know that SBI’s world famous software does not have the option of not deducting penalty in case of premature breakage of fixed deposit in case of payment in deceased accounts. So now greedy me requests for confirmation that the payment made by SBI has been done without deduction of any penalty and in case any shortfall in payment has been made, they should kindly arrange to pay the difference. I reassure myself that as nominee and not just legal heir I need to give full details to the other 7 legal heirs, so it is important for me to know if I have received full payment.

I am a bundle of nerves by now and just can’t pick up the courage to physically go any branch of SBI. So I resort to the tactic of the weak – attack from a distance through letters.

But I get no reply.

A month later I send a reminder. Another month passes - still no reply.

I wonder what it takes to wake up the giant in Indian banking.

Three cheers for SBI’s nomination facility!


A long time back I had very proudly opened a Savings Bank account with a particular branch of SBI in Varanasi. Only grown ups had bank accounts and as a first year university student I felt that I had also arrived in life as evidenced by my own bank account. But with the passage of time and dictates of earning a livelihood I moved out of Varanasi. However, I continued maintaining the SB account since Varanasi happened to be my home town and I visited it regularly. Moreover, I was nostalgic about the account.

It so happened that I had to visit Varanasi in September 2007 as my mother was critically ill and naturally I required funds and felt somewhat secure in the knowledge that I had kept some funds in my old SB account. Unfortunately, my mother died and for making payments related to conducting her last rites. I issued a Self Cheque for Rs.8000/- drawn on my above mentioned SB account. The cheque was not honoured, inspite of sufficient funds, and the person who had gone to collect the money was advised that since the account had become dormant I (the account holder) needed to be personally present for the payment to be made. Conditions being what it was there was no way I could visit the branch. Apart from arranging for last rites, I had fractured my right leg which was in a plaster and it was difficult for me to visit the branch.

Since I was running short of cash, I requested the person to visit the branch again for encashing the cheque and in case of problems he could explain my position to the branch staff and if required get them to speak to me on phone. The payee faced the same problems in encashing the cheque and so called me from the branch and I subsequently spoke to 2 of the branch staff members on the phone and tried to explain the circumstances. But the almighties were not inclined to listen to anything at all. As a fall back support I had also sent a small note through the person who had gone to collect the payment addressed to the Branch Manager explaining the situation and requesting him to honour the cheque but the note was not even acknowledged.

Later I wrote to the bank informing them of this incident. The purpose of my writing to the bank was neither to press charges against the bank’s staff who failed in performing their duties (but do not ever forget to draw their salaries or go on strike at the slightest pretext) nor to seek damages for failure to honour my cheque. The only desire was to draw attention to the great quality of customer service and great sense of commitment to work not just by the front line staff but by most personnel across the entire SBI organization.

I was honored with 2 replies from the Bank. One was a pre-printed letter acknowledging receipt of my complaint. The other was a much laboured reply by the branch manager of the concerned branch explaining how important it is to protect my interest by not honouring my cheques!

As to my enquiry on whether non-honouring of customer’s cheques only on the plea that it is drawn on an account which has turned dormant is as per the Bank’s operating procedures and whether there are any instructions / laid down procedures on how to make payments in cases such as mine there was deafening silence.

Q. E. D.

Monday, July 07, 2008

On Reading Stanley Wolpert's - Jinnah of Pakistan

I recently read the book “Jinnah of Pakistan” by Stanley Wolpert where I found my self in disagreement with the author on various points. I wrote to the author and the publisher but did not get any satisfactory reply. I am giving a list of my observations vis a vis statements in the book below. The observations relate to the paperback edition of the book brought out by Oxford University Press – Oxford India Paperbacks edition of the year 2005 fourth impression of the year 2007:

As per the book : Page 30 - Satyendra P Sinha – A Hindu Brahman by birth
My observations : Lord Sinha was a Bengali and with a surname like Sinha the probability of his being a Brahman is quite low. In all probability he would be a Kayastha.

As per the book : Page 34: Delhi’s Chandni Chawk (Silver Market)
My observations : It is said that moonlight reflecting on a nearby canal earned it its name, 'Chandni Chowk' or the 'Moonlit Cross Road' – please refer to Wikipedia. The name “Chandni Chowk” is not related to silver market. Silver is Chaandi while Chandni means moonlight and the word is derived from Chand (Moon).

As per the book: Page 53 : The Mahmudabad’s
My observations : It is not just erroneous but quite silly to refer to the Raja of Mahmudabad or any of his family members as “Mahmudabad”. Mahmudabad is the name of the place they come from.

As per the book: Page 64 : Amritsar (Nectar of Immortality)
My observations : Amrit means nectar (by drinking it one gets immortality) and Sar (short form of sarovar) means lake. So the correct meaning of Amritsar is the Lake of Nectar.

As per the book : Page 64 : It was Sunday, a Hindu festival holiday
My observations :It was a festival holiday not because it was a Sunday but because it was Baisakhi – the New Year day as per the calendar followed by people of that area which is also a major harvest festival.

As per the book:Page 75 : “Had he adhered to his initial response the transfer of power from Imperial British to national Indian control might have been advanced a full decade and a half”
My observations : A very naive conclusion. Imperial Britain would not have given up control of such a lucrative colony as India until they were sure that they would not be able to control it. Their giving up control was due to twin causes of fight for Independence by Indians and the weakening of Britains economic & political power due to Second World War.

As per the book : Page 77 : “Parsi” Jamnadas Dwarkadas
My observations :With a name like “Jamnadas Dwarkadas” there is very little possibility that the person was a Parsi. The name suggests that he was a Gujarati or Marwari Hindu (caste not determinable by just the name).

As per the book: Page 113 the “Muslim Problem”
My observations : Did the “muslim problem” actually exist or was it Jinnah’s inability to have his way which led him to create the “Muslim Problem”. Incidentally there was no way that creation of Pakistan would solve the "Muslim problem" as Jinnah saw it and a man as intelligent as Jinnah would have knew this. I say this since Pakistan would be created out of the Muslim majority areas where there was no "Muslim Problem" leaving vast majority of oridinary Muslims in India. I am emphatic in stating that Jinnah knew that creation of Pakistan would not solve the Muslim problem or that creating the Muslim problem was a deliberate ploy to have an independent country to rule as it is evidenced with his virtually first speech to the constituent assembly of the new nation which included the words,

"You are free; you are free to go to your temples, you are free to go to your mosques or to any other place or worship in this State of Pakistan. You may belong to any religion or caste or creed that has nothing to do with the business of the State. . . . We are starting with this fundamental principle that we are all citizens and equal citizens of one State. "

As per the book: Page 315 : This negative analysis … reveals Nehru’s intense hatred of Jinnah.
My observations :How is the analysis presented on that page construed to be negative and how is the conclusion drawn that Nehru’s hated Jinnah intensely?

General Observations : Jinnah as a politician or mass leader also failed to appreciate that a sizeable tribal population and other minorities existed in India. There is no mention in the book of his having given any thought to their existence. It is naive to think of India on pure Hindu – Muslim terms.