One of the branches I visited for regular inspection was the Ghatkopar West branch. This branch was also located just outside the Ghatkopar Railway station and hence very easy for me to commute. My other team member was Hegde about whom I have already written in my earlier episodes.
The branch was headed by a Senior Manager by name Vamana Kamath (name changed). Kamath was actually a very senior officer but still comparatively young having joined the bank as a direct officer. Persons of his seniority were heading major branches and were just waiting for promotion to selection grade. But Kamath appeared to be least interested. There were many allegations against him in his earlier postings. But he cared a damn. It was also a fact that in spite of so many allegations against him, no action had been initiated against him so far. He had earlier headed the currency chest and we had heard some stories about him there. In fact we were forewarned that we have to be very careful in inspecting his branch. I must mention here that although I had inspected several branches by then, I was least exposed to branches where frauds had taken place earlier. No doubt I had pointed out several major irregularities in many branches, but the area of fraud was never my cup of tea so far!
But Ghatkopar West branch had already earned the name as a ‘fraud branch’. In fact just about two months prior to our visit, a major fraud had taken place in the branch in which there was a loss of Rs50,000 to the bank. A special investigation had already been conducted. We were very much interested in knowing about this latest event. We found Kamath to be very friendly. He also had a very handsome and lovable personality. He was very thorough in his knowledge of systems, procedures, documentation,etc. But we found one thing strange about him. He would handle everything connected with advances personally including preparation of slips and vouchers. In fact certain deposit and advances accounts were handled exclusively by him. Though he attributed the same to non-availability of trained staff, we were least convinced.
Kamath gave us a detailed account of the recent fraud that took place in his branch. The way he narrated it to us, we felt he was rather proud about the whole episode! One particular day Kamath saw a ‘beautiful’ middle-aged lady at the counter of the branch. He told us that she was so beautiful that he found it difficult to stop staring at her! The lady was making some queries with other customers at the counter. Kamath asked his sub-staff to get her inside his cabin. He asked her what was the service needed by her. She told him that she wanted to open an account for collecting a cheque drawn on a Syndicate Bank branch account in Pune. In those days the only requirement for opening an account was obtention of an introduction from an account holder of the branch. Unlike the present day rules, there was no requirement of photographs and address proof.
Kamath completed the account opening form as per the information provided by her and asked her to get an introduction. She came back to him after some time with the introduction. Kamath verified the signature of the introducer and found it in order. He arranged for the opening of the account. Two days later, the lady visited the branch and deposited a cheque for Rs50,000 drawn on a branch of Syndicate Bank, Pune. The cheque was entered in the register as a collection item and was sent by ordinary post to the main branch of our bank in Pune. As the lady wanted urgent payment, the branch had sought payment advice by telegram.
Within 4-5 days, the branch received a telegram stating that the cheque had been paid (realised). The telegram had correctly quoted the reference number of the branch. But it had a major discrepancy. Our bank had a safety system to establish the authenticity of such telegrams. The telegram should have carried a date code, which was a secret code number designed by our bank. This code was missing in the telegram. For reasons best known to him, Kamath himself took the trouble of making the necessary entries and credited the proceeds to the account of the lady. The lady visited the branch on the next day and withdrew the whole amount.
In the normal course the branch should have received a realisation advice in confirmation of the telegram in due course. But neither the advice, nor the cheque (if it had been dishonoured) was received by the branch. On enquiry, our Pune main branch responded saying neither it had received the cheque nor it had sent any telegram. When the branch tried to contact the lady, it came to know that the address furnished in the account opening form was a bogus one. The bank was left holding only a telegram as a proof of the whole transaction ultimately! The branch managed to get a Xerox copy of the telegram application submitted at the Pune post office. It was given by some unknown person with a bogus Pune address. The bank now contacted the introducer of the account. He was a genuine person. He confirmed his signature in the account opening form. He also confirmed that the lady was a total stranger to him! He was approached by the lady at the counter asking for an introduction. He had signed the form as he found it difficult to refuse the request of a beautiful and charming lady!
The story had many loose ends. One thing was clear. It could not have happened without the connivance of bank staff. The investigating officer had a very easy job as far as the fixing of accountability was concerned. It was none other than the man in-charge, who was totally smitten by the ‘beautiful’ lady! Mind you, the amount may look small in today’s standards. But in those days, Rs50,000 could have easily fetched you a one-room flat in
The episode had a warning message for us. There was every possibility that there were many more frauds which had not come to light so far. We had to tread very carefully in our area of inspection as any slippage on our part would make us also a party to a fraud if found out later! We started moving very cautiously in our coverage. Another incident right then gave us a shocker.
I was covering the portfolio of loans against our bank deposits. In the normal course this is one of the safest advances of the bank. But the branch already had a problem with the loans against Pigmy deposits. The agent was absconding after raising some loans against deposits using some dummy depositors. The genuine depositors found to their dismay that somebody had raised loans against their deposits, when they came for closing the accounts on maturity!
There was a loan for Rs40,000 against a fixed deposit, which had since matured for payment. I found the deposit amount credited to party’s SB account and withdrawn while the loan remained outstanding. I brought it to the notice of Kamath immediately. He was not at all perturbed. After some time he came back to me with a cash voucher. The entire loan amount had been paid with up to date interest by him! The sources from where he raised money were quite unclear. This incident left us shaky. We sent a confidential report in the matter.
While concluding our inspection we had to furnish a summary of all the frauds that had taken place in the branch. In all the branches I had covered so far I used to certify the report as NIL. But in this branch Kamath gave us several files with frauds numbered serially as numbers 1/78, 2/78, 1/79, etc. We were much relieved when we completed the assignment in the end.
Even long after we completed the inspection of this ‘special branch’, I was worried that I may receive a letter from the department stating that we had overlooked some area in which a fraud had taken place. But fortunately there was no such occasion.
------- (To be continued)
A V Krishnamurthy
6th September 2009