Kursela Days 17 – Some Embarrassing Moments

Life in Kursela wasn’t without some very embarrassing moments, which I now try to classify mentally as growing-up incidents. For example, on one of the non-public working days, a customer came to the branch with a request to deposit some money in his account. Since no public transactions were permitted but he insisted on depositing the money, he was directed to me as I was officiating as the Branch Manager that day. The regular BM, as I have mentioned in one of my earlier blogs, was in the habit of rarely coming on Wednesdays (the non-public working day of our branch) and the arrangement was that he used cook up some excuse to go to Purnea to attend to some “official” work on Tuesday evening after handing over charge of the branch to me.  

Even though this customer had my fullest sympathies, I was tied up in bureaucratic red-tape and tried to convince him to come again the next day, when we would accept his deposit as we could not accept it on that day. The man looked extremely crestfallen and started walking away. Then my Field Officer, Sudhir Kumar Singh, intervened. He asked the man to sit outside, and came over to me, and gently suggested that I take the deposit. It was then I realized that at least 8 sets of eyes were firmly set on me, and that I was being tested for something. I was a little perplexed as to how could I validly accept the deposit under the circumstances or what was I expected to do. Sudhir Kumar Singh then went on to explain that the Rs.500/- or whatever sum the man was carrying was big money for the him. Since it was getting late, and people had seen him coming to the bank, there was every possibility that he would get way-laid and the money snatched from him. Well this was a major moral dilemma but what was I supposed to do? I had no other solution with me. Sudhir Singh then elaborated that as BM I had the authority to accept the money (to a certain limit), issue a receipt and keep the money in my personal custody for it to be accounted for on the next working day. Well this was news to me, having never bothered to read the Bank’s Book of Instructions or the numerous circular letters which used to come regularly. I looked at the Bade Babu to take his tacit confirmation as to correctness of this procedure and his glance confirmed that I could go ahead. Thereafter, armed with this new knowledge, I immediately arranged for the man to be called back, accepted the cash and issued a receipt. Suddenly, the tension went out of the room and all the unsmiling grim faces relaxed. I sent a silent prayer to God for having saved my soul that day.

During those days (about a quarter century ago) life used to be much simpler. There were only 2 kinds of Savings Bank Accounts, “with Cheque Book” and “without Cheque Book”. The minimum balance requirement for the former was Rs.100/- while for the latter it was Rs.20/-.  Most people opted for the without chequebook kind of SB A/c, since issuance or wide acceptance of cheques was not common. Moreover, keeping Rs.80/- idle in the account was just not kosher. 

As I have mentioned earlier (in one of my previous blogs), I had taken a personal decision of ensuring that no walk-in customers desiring to open account would ever be turned back. What I failed to mention is that I was able to realize this ambition not by managerial fiat but through active participation and consent of all my staff members. By listening to them, and involving them in all decision making of the branch (thanks to the Quality Circle meetings), I got their complete active cooperation. Soon, the news spread through word-of-mouth in the entire area and we started opening a huge number of accounts, and achieving deposit targets was never more an issue. 

Another innovation which happened was that some of the smaller shop-keepers there had made it a practice of depositing some amount every day. It was generally a small amount, say Rs.10/- or Rs 20/-, but I remember what a small pan shop owner told me – “Money begets Money” – in English, as the reason for his doing the daily deposit.  Conventional wisdom dictated that accepting such small deposits increased the Bank’s costs disproportionately and was generally discouraged. But I felt that accepting such deposits was increasing our marginal costs very slightly and my fixed costs not at all. At the same time it was generating a lot of publicity and good-will for the Bank and so continued with this practice. 

On one particularly busy working day a widow came with her son to open an account. By local standards they looked fairly well off. While the mother was illiterate, she seemed to be in complete control over herself and exuded a certain amount of quiet self-confidence. The son was about 20, literate and also looked quite self confident. Scrutinizing and vetting all new customers was my responsibility as Branch Accountant and I, therefore, explained to them the requirements, helped them fill in the forms, and by way of final explanation told them that Rs.20/- is required to open an SB account and asked them to deposit the money. In about an hour’s time, all formalities had been completed and their pass-book came for my initials. I then called the mother-son duo to hand them their passbook. They accepted it gladly, and handed me a Rs.20 note. I got a little confused as to what this money was for. The mother then told me in a very matter of fact voice. “Sir, this is for you. You had told us that for opening an SB account Rs.20/- is to be paid. Now since you have helped us in opening the account and all the work has been done and we will not have to come again for this work, this is for you.” Then I realized that my comment on requiring to pay Rs.20/- for opening the account had been construed to mean that Rs.20/- is required to be paid as “speed money”! This I think has been one of the most embarrassing situations that I have encountered in my 28 year banking career.

Dress Codes Again - The Hijaab.

Last week the weather in Bahrain had been extremely windy with lots of dust. One morning a colleague, who I met while walking down from the car park to office, mentioned that it made sense to wear the traditional Arabic headgear (Kofiyah) as it would be useful in protecting oneself from the wind and the dust. A very sensible idea and it set me thinking on the utility of this piece of clothing and by extension also the dress codes followed by men & women living in the Gulf countries, which meant by default from Islamic societies.  

Dress codes in every society, is essentially a function of local living conditions and available material for making apparel. The dress codes for men and women which has evolved in the middle eastern countries reflect this. With loose cloaks which keep the person comfortable both in winter and summer. More important, the head covering (by both men and women) is designed to give protection against strong winds and more so against sand and grit which the wind carries. Therefore, to keep the sand and grit out of one’s skin, hair and scalp a scarf is traditionally worn by both men and women for covering their heads and face. While men-folk have the option of keeping their scalps shaved, but just think horror of horrors, having the women folk shaving their heads! Without going into the religious aspects, since I am entirely incompetent to comment on it, I feel the sheer weight of tradition and the weather is what makes both men & women from middle eastern countries wear the head scarf. Though it is funny that while the western media makes such a hullabaloo about the Hijaab it is silent about the Kofiya and guthra worn by Arab men - a head-dress similar to the Hijaab and which performs a similar function! 

For the unbelievers to my logic , I would request that they kindly ponder over to the rationale for “modern” western men wearing a tie and a jacket in hot desert and tropical climes!! Nothing but sheer tradition I would say.

Apparel, I also suppose, helps in fixing one’s identity to some preconceived notions. For example, Massey Saheb started wearing a coat and tie and going to the church to help freeze his identity as a Christian in the film by the same name. Again, we have a lot of Indian women who start wearing a frock to delineate their Christian identity. I have noticed a similar trend with muslim women who have started wearing the hijaab in India, specially South India.

Incidentally , I feel that there is little connection between the amount of clothes a women wears and her allure. A woman can quite fascinate and captivate with a single glance from behind a veil, and at the same time she could be quite prim and proper and put you in your rightful place with a single cold glance with the same eyes, while wearing much less clothes!

Kursela Days 16 – The Trip to Araria

Kedar Nath Roy, known as KN to friends, was one batch senior to me but had landed in SBI through a rather circuitous route. A High School All India Merit Holder, he qualified through JEE and joined BHU IT to do his B Tech (in Mechanical Engineering?). Within a month, he decided that engineering was not his cup of tea so he went off to Hindu College in Delhi University to do his BSc and MSc in Physics. Immediately, after completing his MSc he got a University teaching assignment in Nepal and off he went to Kathmandu. After spending 3-4 years teaching Physics he decided that his heart did not lie in that profession. He then drifted for some more time, before trying out his luck with the All India Competitive Exams, i.e., the IAS, LIC - AAO, and SBI PO exams. He got through the written part of the UPSC exams to be dumped during the final interview round rather for dubious reasons. He got through both the LIC and SBI exams, but opted to join SBI, since LIC gave him a posting in far off Kerala.

I first met KN at Patna when he had been deputed to the Credit Appraisal Department (CAD) at Patna LHO (by his Zonal Office) and I was doing the last leg of probation, during which I was attached to CAD for a couple of weeks. When I got posted to Purnea, it was a delight to know that he was also posted there and lived in a beautiful small house along with his wife Mitali and daughter Jhumi. He soon took me under his wing and has treated me like a younger brother since. KN and Mitali maintained an open house for friends and a meal along with some good banter was assured any or every time we landed up there. KN and Diggy (who we have met earlier) were bosom friends as well as hard-core drinking partners and inseparable after office hours until both passed out. 

On one of my Purnea visits I came to know that KN and Diggy had an invitation to visit one of KN’s friends place in Araria. This person was KN’s college mate and came from a wealthy family of landowners, and so a good reception with nice and plenty of food was assured. It took very little coaxing for me to agree to tag along since the promise of food was too strong. We left Purnea on Sunday morning and planned to return by the evening. Araria was about 40 kms by road, and thankfully the road was in a fairly good state of repair (very unusually so). It was mild winter and the drive was lovely. KN, on his bike with his wife and daughter, and with Diggy and me, on Diggy’s scooter. Enroute there were many picturesque spots of canals, green fields, some great trees etc. and we stopped at a couple of them to enjoy the scenery and click a few photographs.

We reached, the friend’s house and as expected were inundated under a flood of food. We started off with a hearty breakfast but KN and Diggy (as usual) and their friend had other ideas in mind. They started getting drunk and stoned and competed with each other throughout the day in determining who could drink more. Well, by this time, I had got quite used to their drinking binges and I, as usual, concentrated on my eating. The lovely breakfast was followed by in a 3 hours time, with a lovelier and heartier lunch. By late afternoon, while I was bursting with food, KN and Diggy were totally sozelled and stoned. 

The real fun started on our return journey. Diggy insisted on driving the scooter with me as pillion and the more I tried to reason out with or request him to let me drive, the more adamant he became to drive the scooter. All this while KN kept on giving his stupid, leary, drunken grin with Mitali looking very grim and not saying a word. Jhumi was too small to understand or care about the situation. All the way from Araria to Purnea, Diggy and KN tried to race each other out, with me somehow clinging on to the scooter for dear life and praying to my Maker that there should be no mishap. From that day, I started believing in God, as we reached home without any mishap. KN went off to his house while Diggy and I to Diggy’s house. I think we must have reached by about 5 pm and the only thing all of us were in a position to do was to sleep off the experience. 

Next day I did not return to Kursela on account of some official (genuine) work at the Regional Office where I again met up with KN. The previous day’s incident was still very fresh in my mind and in good faith decided to try and rub some reason into KN to avoid such antics in future. So I told him with all sincerity as to why should he try such stunts and rounded it off with saying – “See  KN, you had your wife and daughter along and you should consider their welfare too”. KN gave me a hard look in the eye and replied, “They are my wife and my daughter and I don't want such stupid advice from you again”. I never again dared question KN on his drinking.

Pratip Chaudhuri’s Farewell Message

On 30th of September 2013, Mr. Pratip Chaudhuri retired after a long and distinguished career with the State Bank of India, in the process having reached the top-most position of the Bank as Chairman, a position which he served for the last two and a half years of his career. On the eve of his demitting office he gave a farewell message to his soon to be ex-collegues, a copy of which was forwarded to me by a friend working with SBI. 

The first issue I would like to address is as to the reasons why Mr. Chaudhuri’s farewell message has or should have any interest for either me or for you dear reader or for that matter any member of the general populace. First, speaking for myself, I started my banking career with SBI and though I spent only about 11 years in that organisation (of my total working career of 28 years), I retain strong emotional attachments and some of my best and closest friends still work for SBI. Second, as an unrepentant pseudo secularist reactionary capitalist pig owning all of 149 equity shares of SBI, I have a direct interest in the financial wellbeing and progress of the Bank. Third, with more than 60% of the shareholding in the Bank owned by the Government of India ostensibly held on behalf of 1.1 billion Indians, my fellow Indians also have a large stake in the Bank and would have an interest in its growth. 

But the most important reason for all citizens to be concerned about progress of the Bank and its efficient management is that, as India’s largest bank with a market share of close to 16%, it has a large bearing on the working of the bank centric financial markets of the country. This is because most of the PSU banks look up to SBI for guidance and direction and therefore, directly and indirectly, influences close to 80% of the country’s banking system. SBI has also been a source for trained banking manpower to most foreign and new generation private sector banks in the country and the culture it exports through this means is expected to continue to have large affects on Indian financial markets. 

The Committee on Financial Sector Reforms (2007 – the Raghuram Rajan Committee) has very aptly stated that reform in the financial sector is both a moral and an economic imperative as it can generate millions of well paying jobs and have an enormous multiplier effect on inclusion and economic growth and can add between a percentage point and two to the economic growth rate. The Economist in one its articles (12^th April 2008) has also commented that inefficiencies in India’s financial system leave the country’s savers with too little reward for their thrift, its poorer borrowers with too few alternatives to the moneylender and its incumbent firms with too much protection from upstarts, who cannot raise money to compete. Therefore improvements in SBI’s functioning, with its large influence on Indian financial system, has a crucial and direct link on the social and economic well being of the country. As such, I hope the importance of SBI’s performance cannot be overstressed, and should have much interest for all of us.

I therefore read Mr. Chaudhuri’s message with more than a little interest, but I was somewhat disappointed. The entire message is not just badly drafted but also rambles on without much focus, specially on issues which should matter. The monograph starts by stressing the importance of data for assessing SBI’s performance. However, the impression I gathered is that data presented seeks to hide more than to reveal. For example, in giving details of quarter-wise growth in Deposits and Credit (page 2), to stress the growth in business under his stewardship, the figures compares SBI’s position vis a vis only the nationalised banks, instead of with the banking industry as a whole, which would have given a clearer picture as to how well SBI has been faring.

Similarly, in discussing the quality of growth, Mr. Chaudhuri mentions that “the endeavour has been to grow only on the basis of customer deposits, largely retail and relatively low cost”, without presenting data on what has been the level of CASA deposits compared to total deposits of the Bank over the previous few quarters, or in comparison to the Indian banking industry.

In listing steps taken to ensure quality of credit, the most important requirement for a bank, viz improvements in appraisal and monitoring is conspicuous by its absence. It is a well established and accepted fact that due to the presence of the free rider problem in financial markets, the only way banks can make money in the lending business is by lending to non-tradable perceived lower quality borrowers. Moreover, such lending is what canalizes societal savings for productive purposes to enable the economy to grow and create employment and society to prosper. Lending by covering credit risks under various insurance options, or lending to AAA borrowers, or lending against liquid security like gold does not really benefit the economy or society and is also reflects poor business sense. It also does not cover SBI’s management in glory.

Similarly, the comment (Page 5) on handling the growing NPA levels of the Bank that “if nothing works, initiate the recovery process” reflects poor judgment. There is no attempt to analyse or introspect as to the underlying reasons for NPAs or how the Bank can keep it under control. In the banking business the only way NPAs can be prevented is to stop lending. So there can be no well functioning bank without NPAs.  Having said that, developing skills and processes to handle credit risk is the key to successful banking, both, in terms of generating returns for shareholders, and for promoting economic growth by helping capital formation. 

The most important omission of hard data is the absence of details as to how the level of NPAs have behaved in the recent past. Data on quarterly levels of Gross and Net NPAs vis a vis total Loans & Advances, along with quantum of provisions vis a vis Gross NPAs would have gone a long way of clearly showing how well the bank has been doing in its core function of handling credit risk in making loans and advances. 

It is the data on Business per Employee / Business per Officer (Page 7 – 8) which is the most depressing. These particulars show that productivity is much lower in SBI vis a vis nationalised banks, inspite of higher perks (higher limits for leased accommodation, 2 mobile phones, higher furniture entitlements etc.). As such, inspite of higher total emoluments, employee productivity is much lower in SBI, both for officers as well as clerks. 

The low staff productivity at SBI has been a long pending issue and is better appreciated if we look at some of the operating particulars published by RBI in “Profile of Banks 2012-13”:

	Business Per Eployee Rs.Millions	Profit Per Employee Rs. Millions	Wages as % of Total Expenses
All Banks Aggregate	121.33	0.83	13.02%
Nationalised Banks	142.23	0.65	11.81%
Foreign Banks	217.33	4.56	18.22%
SBI & its Associates	101.97	0.60	16.20%
New Private Sector Banks	93.03	1.18	11.40%
State Bank of India	94.39	0.65	17.57%

As can be seen from the above, SBI has one of the lowest levels of Business per Employee and Profit per Employee, compared to all categories of banks. This is coupled by the fact that Wages as % of Total Expenses is much higher for SBI as compared to the industry norms, the nationalised banks, the new private sector banks, or even compared to its associate banks. Only foreign banks operating in India have a larger component of expenses as wages. But then foreign banks have a business per employee of 2.3 times and profits of 7 times that of SBI! 

Since staff at SBI are not paid much more than their peers in nationalised or new private sector banks (by any stretch of imagination) and are paid much, much less than foreign banks operating in India for comparable knowledge, skills and position, the above statistics indicate that for some reason employee productivity in SBI is very low. The reasons could be poor morale, low understanding and use of technology, inefficient organization of work, lack of organisational focus etc. Ultimately, it boils down to only one thing – poor management!

Mr. Chaudhuri does not spare any time of effort in seeking or spelling out reasons for this phenomenon, and unless the reasons are sought, no answers can be found, and consequently no rectification can take place! He does list out some initiatives for offering low and high powered incentives to the staff. But are such incentives sufficient to weld SBI’s 2.28 lakh members into one coherent team? Do they give a sense of unity or direction to its employees, or does it provide the essential energy pill which will bring out their latent talents and creativity? Does it help in clarifying and building consensus in terms of SBI’s role and responsibilities in the minds of all the stakeholders, firmly and upfront?  My take on all of these is a capital NO, and without primary and sustained focus of top management to improve provide clear simple and clear vision to the organisation and its employees there can be no succour! 

Tinkering with hesitant steps in HR practices is no solution. HR follows organizational vision, and if that itself is muddled, HR practices will flounder despite good intentions, the presence of which may even be suspect to many. In any case, an organization needs to have clarity in terms of where it wants to go before deciding on how to get there. Rhetorical proclamations of growth, social equity etc only helps to obfuscate the main issues. 

PS: I do not know Pratip Chaudhuri ,have never met him, and hold nothing for or against him. I have used his farewell message as a point of departure to try and bring out the urgency of reforming the management of SBI.