Friday, February 28, 2014

My Days South - Episode No.9

As I have mentioned earlier, working in a bank branch where its Head Office is also situated has its own perils. While your achievements may not reach the top administration, you can be sure that any complaint against you will reach them - even up to the CMD level within no time. Once it reaches the level of CMD, you don’t know what sort of fate awaits you! Another fall out of this situation is that your bosses expect you to do certain things against your conscience. You may be forced to do them knowing very well that the same is against the rules and ordinary prudence!
Our bank had floated a subsidiary for undertaking merchant banking activities. The persons posted there were generally high-fliers. They believed that they were a privileged class and the branch officials were supposed to meet their needs – no matter whether the same went against the established procedures and systems.
One day I was called by my Senior Manager Kudva to his cabin. He introduced me to a young officer who was working at the said subsidiary. He had an inter branch advice with him for a few crores issued by a major branch of our bank in Mumbai. The amount represented the proceeds of a call money placement by a Mumbai Corporate with the subsidiary. I was asked to credit the proceeds to any of our corporate accounts by reducing the drawing power (limit) to the same extent. As and when the Mumbai Corporate wanted the funds back, I was supposed to debit our client’s account and remit the money back to our subsidiary along with interest till date. The client was supposed to pay one percent less on this amount than what was being charged by us.
The exercise went like this. Our subsidiary was getting the funds from the Mumbai corporates at about 8% per annum. Our clients were being charged at about 16% on an average by our bank. They would be charged 15% (one percent less) for the period the funds were in their account. Our subsidiary would pocket cool money of 7% on the amount for the period of the deposit.
While the intention of the subsidiary to make money was understandable, it had no business to use our branch as a vehicle for the purpose. It was also not clear whether it was licensed to conduct such money market operations. As a Manager I had no authority to debit and credit a company’s account without specific instructions – no matter even if I was offering a 1% rebate in interest. But the Senior Manager told me that the subsidiary may complain to the CMD, if we refused to toe its line. The subsidiary was a brainchild of our CMD and antagonizing the officials amounted to rubbing the CMD on the wrong side!
I was forced to do this adjustment against my conscience. I had to get it done through an officer under my signature. Even though I was acting as per the instructions of the Senior Manager, I knew that only the officer and I would be held responsible for the transactions later. There was nothing to prove that I was acting under his orders. The officer from the subsidiary would suddenly turn up one day and ask us to reverse the transaction. This became a nuisance for us. Besides some of the clients started questioning our action and asked us not to ‘play in their accounts’ as such unauthorized transactions attracted adverse comments from their auditors. They said they were not interested in this 1% benefit scheme!
One day our Senior Manager received a phone call from the CMD’s office that he was not happy with the treatment given to the officers from the subsidiary. The officer had complained to him that we were reluctant to handle the ‘adjustment business’. By that time our bank had floated a mutual fund venture. The officers from the Fund also started approaching us for similar adjustments. In fact the officer who used to call on us was said to be a close relative of the then ED of our bank. We were naturally expected not to rub him on the wrong side!
We carried on with this adjustment under duress. I was aware that the adjustments were against the bank rules. I thought it prudent to bring the same to the notice of the Head Office. One day I drafted a letter addressed to the Credit Wing at Head Office requesting them to confirm that the branch was in order in doing such transactions at the oral request of our subsidiaries. The Credit Wing was then headed by a person who was my DGM at the Kolkata Circle for some time. This gentleman knew that the transaction was not in order. But he did not want to antagonize the CMD. He did the best thing to safeguard his skin. He telephoned our Senior Manager and told him not to address such letters to the Credit Wing in future! He said he was destroying the letter at his end!
I left the branch in the year 1990. The Harshad Mehta Scam took place in the year 1992. Both the officers mentioned by me above (one from the subsidiary and the other from the Mutual Fund) were arrested by the CBI. One of the allegations against them was routing the money of one corporate in the account of other corporate (including brokers’ accounts)!
------- (To be continued)
A V Krishnamurthy

Wednesday, February 26, 2014

I Don’t Know, Son! – 74

The Bitcoin Facing a Bit of Problem!
Son: Mt. Gox, the world’s biggest bitcoin exchange has disappeared suddenly with its website down, dad.
Father: Go on, son.
Son: Angry investors were left wondering whether exchange was still solvent, dad.
Father: Go on, son.
Son: According to sources, the exchange is in a bit of problem, dad!
Father: Go on, son.
Son: However, they failed to explain the real position as it was difficult for them to coin suitable words, dad!
Father: I don’t know, son!
Old Bank Licence!
Son: The committee headed by former RBI Governor Bimal Jalan has submitted its recommendations on new bank licences to the Reserve Bank of India, dad.
Father: True. Go on son.
Son: A RBI spokesperson is said to have refused to reveal as to when RBI would announce the names of the applicants successful in securing the licences, dad.
Father: Go on, son.
Son: However, he is said to have confidentially revealed that right now one old bank licence is up for grabs, dad!
Father: How come? Which is the bank? Go on, son.
Son: Apparently it appears that he was referring to United Bank of India (UBI), which is in the news for all the wrong reasons, dad!
Father: I don’t know, son!
UBI CMD Resigns for ‘Health’ Reasons!
Son: The CMD of United Bank of India Archana Bhargava has resigned and has opted for voluntary retirement citing health reasons, dad.
Father: True. Go on, son.
Son: While the CMD has not revealed the nature of her sickness, it is reported that the bank is finding it difficult to handle a number of large ‘Sick’ accounts left behind by her, dad!
Father: I don’t know, son!
Blue-eyed Boy to Scapegoat!
Son: The posting of a Bank official as CMD of a PSU bank is treated as a Blue-eyed boy posting all these days, dad.
Father: True. Go on, son.
Son:  Now that the CMD of United Bank of India has resigned, the vacancy is up for grabs, dad.
Father: True. Go on, son.
Son: But it appears none of the Executive Directors of the PSU banks are interested in the once coveted post, dad!
Father: Go on, Son.
Son: Apparently, the post looks like a ‘scapegoat’ posting than a Blue-eyed boy posting, dad!
Father: I don’t know, son!
A V Krishnamurthy
26th February 2014

Tuesday, February 25, 2014

Panduranga Bhat - The Vintage Personality

“Not all the armies of all the empires of earth
can crush the spirit of one true man. 
And that one man will prevail.”
                                                                      ---Terence Mac Swiney
If you are a person who is interested in meeting unique personalities, you may visit the Corporation Park on the 16th Main in BTM Layout, Bangalore, on any day between 5 PM to 6 PM. You are certain to find an elderly gentleman in pure white dhoti and Kurtha sitting on a bench with his small circle of friends. Yes, he is the man you are searching for. He is Panduranga Bhat, the man who fought for truth all his life. Now in the evening of his life, Mr. Bhat will appear to you as simple and as pure as - you guessed it right - the original Gandhi Mahatma himself! Mind you, there is absolutely no exaggeration in this comparison. That there is some physical similarity is of course only coincidental!
I was introduced to Bhat only about three years back. But within this short association I could catch a glimpse of his vintage personality. He has always treated me as his younger brother. This is my tribute to the venerable gentleman of the 1929-vintage.
Panduranga Bhat was born as the second son of Purshotham Bhat and Anasuya Bhat couple at Dongerkeri in Mangalore on 11th October 1929. Bhat’s grandfather Ram Bhat was a well-known Purohit (priest) in the Konkani Brahmin community. While Ram Bhat’s other sons continued with the hereditary occupation of priesthood, Purshotham was made of a different mettle. He was quite aware that he could not bring up his family of six sons and a daughter with the small income generated from the profession of priesthood. He knew his future was in business. He started a kirana shop in the prestigious Car Street in Mangalore. He ran it quite successfully and was later joined by his two sons – Vasanth and Raghavendra.
Left to himself Panduranga Bhat would have perhaps retired as a successful doctor in Mangalore. He was basically good in studies. But that was not to be. Family constraints made him join his maternal uncle in his textile business. His mother hailed from the highly prestigious Sujirkars’ family that was well known for its textile business in Mangalore. Bhat joined the firm in 1946 after discontinuing his studies, as an Intermediate student. That was the end of his educational career.
Bhat began his professional career at the age of 17 years, as a cashier in the textile shop, on a monthly salary of Rs50. Within a short time he picked up all the nuances of the textile business. Slowly he was entrusted with higher responsibilities and became an expert in the line. Everything went well till his maternal uncle passed away suddenly in 1958. As the children of the uncle were quite young, there was no elder male member in the family to look after the business. Bhat was offered a partnership in the business for managing the shop. But he was reluctant to take the full responsibility on his shoulders for obvious reasons. It was Shri GopalaKrishna Nayak, the chairman of Corporation Bank and a close relative of his maternal uncle, who persuaded Bhat to take charge of the business. He made Bhat sign the partnership deed. In addition to a share in the business, Bhat was offered an annual remuneration of Rs1,800. Simultaneously Bhat’s annual salary was also increased to Rs1,000 from the earlier Rs600.
Bhat’s business acumen came into the fore now. He took a working capital facility from the Corporation Bank through the good offices of Mr. Nayak. The business saw a big jump and Bhat could clear all the loans including the working capital facility from the bank within a short period of one year. Bhat was in need of another partnership now – the life partnership! He found his companion in Meera alias Shobha who hailed from a respectable family in Kumble in Kasaragod. The marriage took place in 1959. The couple led a happy married life even though they had no issues. Bhat carried on the business successfully till late sixties. He allowed his share in the partnership to accumulate and drew only salary and remuneration as agreed.
Things took a different turn when the elder sons of Bhat’s maternal uncle joined the business by 1967. Bhat was meticulous in maintaining all the accounts and the younger generation had their own way of thinking. There was a clash of values. After carrying on till 1969, Bhat had it enough. He decided to quit and join his father’s business with his other two brothers. It was again Mr. Nayak who intervened and asked Bhat to accept Re1 lakh as his final settlement amount. Nayak advised Bhat to open his own business with the settlement amount. He knew the capacity of Bhat to manage the business. Bhat was not at all agreeable. He simply quit and joined his father’s business.
Bhat was given the exclusive charge of handling Government ration business. The business needed maintenance of detailed records. Bhat was a master in keeping records as he was an expert accountant by now. While Raghavendra looked after supply side, Vasanth handled the main business in the shop. The first son Sadashiva moved to Mumbai and settled down there comfortably. The fourth son Ganesh did his B.Com, LLB and joined the Syndicate Bank. The youngest Rajaram also did his B.Com and joined Syndicate Bank. The only daughter Jayanthi was married off to a respectable family. Her husband was a Manager in Canara Bank. The joint family saw good days with all the members settled down comfortably. Meanwhile, Raghavendra diversified into dairy business.
The family shifted to Bangalore in 1981 at the instance of Ganesh who rose to the position of AGM in Syndicate Bank. For some time the family stayed with the youngest son Rajaram and then moved to a separate house in Hanumanthanagar. The parents had passed away in the meanwhile. Raghavendra remained in Mangalore. Ganesh later took VRS and came to Bangalore and settled down at his house in BTM Layout.
Bhat joined Padam Distributors, who were exclusive distributors for Vimal’s sarees, as an Accountant. The firm initially recognised his expertise and was giving him liberal bonus in addition to salary. He worked there until 1985. That year the firm told him that it could not pay bonus as there was no sufficient profit. Bhat knew exactly how much the firm had earned! He told them bluntly not to offer excuses to him and rather tell him that they were not willing to pay bonus. He also thought it was high time for him to leave.
Bhat had another shortest employment with a firm called Ranka Brothers. The proprietor of this firm had known Bhat when he was with the earlier firm. He could make out Bhat’s abilities and in fact had been pestering him to join his firm. Now that Bhat had left the firm, he asked him to join his firm immediately. Within two days of joining the new firm, Bhat found out that the employees of the firm were stealing cloth on a regular basis by hoodwinking the owner. He asked them to mend their ways. But the bunch was a hardened lot. It threatened him with dire consequences unless he joined them in their cheating business! Bhat resigned on the third day!
Bhat was now invited by Padam Fabrics, who were distributors for Orkay Mills. The proprietor was related to the owners of Padam Distributors and knew the true worth of Bhat. He fully utilized the services of Bhat. Bhat advised him to avail working capital facility from Bank to increase the business turnover. He helped the firm to improve the turnover from Rs85 lakh to Rs3.5 crore within a short time. He served the firm with distinction till he took retirement in the year 1997. Meanwhile he lost his beloved wife due to a sudden heart attack in 1995. It was a personal tragedy for him. It took some time for him to recover from the permanent loss.
Bhat himself had a heart attack and was admitted to St. John’s Hospital in a serious condition. He thought he was following the path of his beloved wife as he had witnessed her sudden death under similar circumstances. But his heart was revived at the hospital and he came back to life. He saw a doctor named Pravin treating him. Pravin wanted to know the ‘financial position’ of Bhat. Bhat always took things light-heartedly. He told Pravin that he expected him to tell his ‘heart-position’ instead of ascertaining his financial position! But Pravin was dead serious. He told Bhat that he had three of his arteries blocked, which needed surgery. Bhat asked him how many of them were still open and got the reply as ‘none’! Pravin also told Bhat that the cost of operation would be more than Re1 lakh. Bhat told him that he wanted to be discharged to go home!
Two days later another doctor visited Bhat at the hospital. He was Dr.Pradeep Shetty (the famous cardiologist who is presently with Narayana Hrudayalaya). He was the son of a famous Judge whom Bhat knew very well. He started talking with Bhat in Tulu. He was surprised to find Bhat quite relaxed in spite of knowing that he needed a major heart surgery. He told Bhat that he would reduce the cost of operation to about Rs85,000. But Bhat was not prepared to part with his lifetime savings, to be at the mercy of others for his maintenance all his life. He asked Dr.Pradeep to tell him if it was possible to get his arteries opened by changing the lifestyle and by regular treatment. The doctor told him that he was taking a calculated risk even though it was theoretically possible.
Bhat simply got himself discharged and came home. He was determined to get himself cured without the costly surgery. He consulted Dr.Chandra Ghatgi, who directed him to Dr. Manjunath at the Jayadeva Hospital. Dr. Manjunath told Bhat that it was indeed possible to have the arteries reopened with strict regimen of food and lifestyle coupled with medical treatment. Bhat started taking medicines on the advice of Dr.Chandra Ghatgi. Later he started taking Homeopathic medicines in addition to allopathic treatment under the advice of Dr.J K Gundu Rao. He changed his lifestyle completely with regular walk and dieting.
You may not believe this! But true it was. A test conducted after one year found one of the arteries of Bhat opened completely enabling smooth flow of blood into the heart! Another two years later the real miracle had taken place! The other two arteries had also opened up fully! Bhat had created a medical history!
A number of factors had contributed to the medical history created by Bhat. Bhat always had a philosophical approach to life. He had association with the Ramakrishna Mutt in Mangalore right from 1954. He was formally initiated in 1966 by Swami Veereshwarananda. He was closely associated with the activities of the Mutt in Mangalore. He had great respect and attachment to the personalities of Ramakrishna Paramahamsa, Sharada Devi and Swami Vivekananda.
Bhat continued his association with the Ramakrishna Ashram after coming to Bangalore. Till date he is actively involved with the activities in the Ashram. This helped him immensely in bearing the loss of his beloved wife. Bhat couple had no issues; the void was filled up by children of his brothers and sister. His younger brother Ganesh wanted him and the family of Vasanth to live with his family in BTM Layout. He constructed an additional floor in his house to enable the trio of Bhat and Vasanth couple to live independently.
Bhat has led a pure and simple life without aspiring for wealth and fame all these days. He remains jovial even in the evening of his life as you will find out when you speak to him personally. He has great regards for his brother Ganesh and his wife Suguna, Vasanth and his wife Sumana who are looking after him so affectionately. May God bless him with good health and happiness always!
A V Krishnamurthy

Friday, February 21, 2014

My Days South - Episode No.8

I feel it is high time for me to divert from the story of the XYZ Company for some time so that the readers get a break. The XYZ story continued for the entire three years of my stay at the Corporate Cell. Hence in order to maintain the chronology of the events let me shift to my other experiences at the branch. I would get back to this part of the story at an appropriate time.
As mentioned by me earlier, the clerks at the Corporate Cell were being chosen with due care. One fine morning I received on my table a letter drafted by one of the clerks along with copies of several documents. In those days copies of all loan documents in respect of limits above Rs25 lakh had to be sent to the Legal Department at the Circle Office for scrutiny. This correspondence pertained to one such sanction.
The letter had been drafted by one of the clerks by name Javed Ahmed. Even though the letter bore the initials of the Accountant concerned, I could make out that the entire thing had been handled with great efficiency by the clerk himself. It was indeed a piece of quality work. It clearly showed that the clerk was knowledgeable, efficient and well organised. I called him and expressed my deep appreciation for the work turned out by him.
I had occasions to take Javed with me during my visits to certain corporates. He came out as a jolly and thorough gentleman who was willing to take up higher responsibilities. In my earlier posting at Canning Street, I had not seen a single clerk who could come up to the level of this young man. Javed resigned the job after some time and moved to Middle East for better prospects. Our bank lost a capable and efficient employee. My short association with Javed remains etched in my memory till today.
The best clerk I came across at the Corporate Cell was, however, a young man called Basil Lobo. Lobo hailed from a place called Basrikatte located on the way to the famous pilgrim centre Horanadu. True, he did not have the proficiency in drafting letters like Javed. Born in an ordinary Malnad village family, Lobo had come up in life the hard way purely on his own efforts and abilities. But his village background did not limit his abilities in handling the sophisticated customers of our bank in the city of Bangalore. He had a penchant for outdoor work. You could assign any tough task to him that could be sorted out only by meeting the client personally. The task could be recovery of loans, obtention of documents or securing the deposits! You name the task and he was there to do it for you. You could always bet on his success. That was the typical Basil Lobo for you!
Lobo’s official work included follow up of bad loans including loans granted during the famous ‘Janardhan Poojari Loan Melas!’ You had to see how he managed to catch the small borrowers by identifying them and tackling them! Even though the Corporate Cell was expected to handle only loans of corporates, on account of some strange reasons, all bad loans (called LPD accounts in our bank) were being dumped on the Cell for follow up.  We managed to handle them so long as Lobo was there. Once he moved out on promotion, we dumped them back on the Main Branch!
Having worked so far only in Mumbai and Kolkata, I was new to the scooter-culture of Bangalore. But quite unlike in those two cities, as I realised soon, it was impossible to move in Bangalore without a two-wheeler. But those were the days when Bajaj scooters still carried a premium and there was a long waiting list. I could manage to get a Chetak scooter from a person who got it on a NRI quota. But I had never driven a two-wheeler till then and I had the road fear. But once I mentioned this to Lobo, it was a different story altogether!
As already mentioned by me Lobo was a ‘restless’ person. Once he undertook a job, he would not rest until he saw its logical end. Let me tell you the end was invariably the ‘success’ in Lobo’s case! Within a matter of two weeks, he taught me driving the scooter with confidence. He also personally took me to the Indiranagar RTO Office and got me the permanent driving license.
Lobo was at his best in handling the Government officials. He used to take me to different offices for different purposes. He would quickly identify the person/official who would help us out. Then he would approach him and speak to him in his own language – be it Tamil, Telugu, Tulu or Konkani! That would do the trick most of the time. If not, he would find some other way to reach the officer concerned directly. He would take me to the official only after the background work was completed by him. Normally it would be a smooth affair in the end.
Lobo had planned his personal affairs quite meticulously. He started applying for a BDA site immediately after joining the bank. He managed to get a site allotted in his third or fourth attempt. By the time he became an officer, he had already built his first house!
After working in the Corporate Cell for some time, Lobo looked out for greener pastures. He identified the Foreign Exchange Department in our bank as the opportunity for his future career. He managed to get a transfer to our Overseas Branch, which was newly opened by the bank at M G Road in Bangalore. He worked there for two years and picked up all the nuances of the foreign exchange business. He got his promotion in his first attempt and again managed to get a posting to the Commercial Capital of India –the great city of Mumbai.
Lobo was with me through thick and thin even after he left our Corporate Cell. I left Bangalore after three years for a semi-urban posting on promotion as Senior Manager. Lobo went to Mumbai at the same time. By the time I came back to Bangalore after three years to our Trinity Circle M G Road branch, Lobo was back at our Foreign Exchange branch in M G Road! He had become an expert in foreign exchange! He was given the coveted post of a dealer in foreign exchange. How he managed his postings so fast and picked up the expertise in the foreign exchange business could have been a case-study for the interested persons.
Lobo was a man in a hurry. Naturally he could not wait for his normal promotion at our bank. He had already developed connections with private foreign exchange dealers in Mumbai. He was appointed as the Manager of a private exchange company in Bangalore and he resigned his bank job. The year was 1993 and the present day hefty salary packages were unheard of in those days. But Lobo had got a salary package with car and accommodation facility that could have been the envy of a General Manager of our bank!
The career graph of Lobo had moved vertically in a span of about five years. He was after me asking me to purchase a car. He wanted to teach me driving and get me the driving license just like he did it for me for the scooter. But I had to wait for another two years to get a bank car officially. But it came too late as far as Lobo was concerned!
Like all good things in life, my friendship with Lobo also came to an end on one unfortunate day. As the Senior Manager at the Trinity Circle branch, I was facing some critical and tense situation on a particular day. Lobo came to me at that very situation with some urgent request. I told him my inability to help him at that particular time. He was very much particular and told me that he may never come back to me again! But I was in such a situation that I told him I couldn’t help it!
That was the end of my relationship with Lobo. I never saw him again. Perhaps it shows how the bank Managers are made to lose even their close friendships because of the work pressure! A close relationship built over several years was lost in a minute! I am dedicating this particular episode to the memory of my association with this extraordinary man called Basil Lobo. I wish him all the best wherever he is at present!
------- (To be continued)
A V Krishnamurthy

Sunday, February 16, 2014

I Don’t Know, Son! - 73

Yuvraj to Demand Guarantee!
Son: The employees of Kingfisher Airlines have requested the cricketer Yuvraj Singh to refuse playing for RCB, promoted by Vijaya Mallya, the owner of Kingfisher Airlines, dad.
Father: True. Go on, son.
Son: They say while Mallya has no money to pay their salary, he is splurging his money on Kingfisher calendar, his cricket team and Formula One Team - Force India-dad!
Father: True. Go on, son.
Son: Vijaya Mallya has bought Yuvraj for Rs14 crore (the highest bid amount in IPL so far), dad.
Father: True. Go on, son.
Son: Obviously Yuvraj does not want to waste this golden opportunity, dad.
Father: Go on, Son.
Son: But now that the employees have brought the matter of Mallya’s default to his notice, he seems to have got some ideas, dad.
Father: Like what? Go on, son.
Son: He is said to be thinking of demanding a personal guarantee from Mallya and a corporate guarantee from the UB Group for his money, dad!
Father: I don’t know, son!
The Usage of Brains!
Son: The Indian bowlers on the New Zealand tour have suddenly got into a fine form, dad.
Father: True. Go on, son.
Son: They recorded excellent performance in the second innings of the first Test and repeated it in the first innings of the second test, dad.
Father: True. Go on, son.
Son: When asked to explain the reasons for their sudden turnaround, the bowlers are said to have given a simple reason, dad.
Father: Like what? Go on, son.
Son: They say they simply started using their brains as advised by their skipper Mahendra Singh Dhoni, dad!
Father: I don’t know, son!
The Competition in Tea Business!
Son: The convicted Lalu Prasad Yadav has said that he had doubts over Narendra Modi selling tea, dad.
Father: True. Go on, son.
Son: He has claimed that it was he who was a real tea vendor once upon a time, dad.
Father: Go on, son.
Son: But what he has unsaid is that he later diversified into ‘fodder’ business unlike Modi and landed himself in jail, dad!
Father: True. Go on, son.
Son: When the reporters approached Mani Shankar Aiyar for his comments, he is said to have told them that Lalu has been always been a Congress ally, dad.
Father: Go on, son.
Son: According to him, Lalu needs no invitation to sell tea at AICC sessions, dad!
Father: I don’t know, son!
The Brand Ambassador in Defaulter List!
Son: Sachin Tendulkar, Late Shiv Sena Chief Bal Thackeray and Samajwadi party leader Abu Azmi are among the water bill defaulters in Mumbai, dad!
Father: True. Go on, son.
Son: The list was released by the Brihanmumbai Municipal Corporation (BMC) for which Sachin Tendulkar is the Brand Ambassador, dad!
Father: Go on, son.
Son: Sachin has now retired from all the three forms of Cricket and understandably has plenty of time for settling all his payments, dad.
Father: Go on, son.
Son: According to some sources, Sachin is expecting BMC to write off the dues against his fee for Brand Ambassadorship, dad.
Father: Go on, son.
Son: But BMC obviously thought that Sachin was doing it free, dad.
Father: Go on, son.
Son: It appears both the brands (of BMC and Sachin) have suffered a huge damage in the process, dad!
Father: I don’t know, son!
A V Krishnamurthy
16th February 2014

Friday, February 14, 2014

My Days South - Episode No.7

It will not be appropriate for me to keep my readers guessing about what happened ultimately during the stock inspection at Bombay. But as far as I was concerned it was actually an anti-climax. The stock inspection did take place – but not by me! Let me explain.
The DM had recommended my name fully knowing the implications of making a report that would have landed the company in a difficult situation. More so, on account of the ensuing rights issue. Some of my colleagues had even started telling me that I would be in definite trouble whether I gave a clean report or otherwise. According to them it was a ‘no-win’ situation for me.
Two days after sending the recommendations, our DM received a sealed envelope from the DGM’s Office delivered directly to him by a messenger. It was an order signed by the DGM himself. It clearly stated that the stock of the company with the consignment agent at Bombay should be checked by the DM and a report sent to the DGM expeditiously! By the stroke of a pen, the DGM had shifted the onerous duty from me to the DM, who had recommended my name for the purpose. Needless to say it was a great relief for me.
But whether it was me or the DM, the problem was very much the same. The DM was also not new to Bombay. In fact he had come to our branch on transfer from the Girgaum branch there. But understandably, he did not possess the skills of an experienced inspecting officer in conducting the inspection of stock. But in all probability this fact helped him in handling the situation with ease and with very little tension! It is a well known and established fact in banking parlors that it is always easy to convince a high-cadre executive than a junior officer! While the former is not bothered about the details, the latter is particular about each and every aspect and is generally a hardnut to crack!
The DM did prepare himself well for the task before leaving for Bombay. He took all the details of the stock dispatched to Bombay by the company from Bangalore. We were waiting for him anxiously when he came back after two days. To be frank, we expected him to be tensed up on return. But to our surprise and relief we found him quite cool!
The DM told us that he was shown the physical stock valued at about Rs50 lakh by the consignment agent at his Vile Parle godown. As to the balance stock of around Re1 crore, he was told that the agent had sold it on credit to different parties! The agent also made it very clear that he had not received any payments from them so far. Any further physical verification of stock with those parties was only a wild goose chase!
The DM submitted a report to the DGM basing on his visit to the party’s godown. It was drafted in such a way that it neither hurt the party nor exposed the DM to any undue risk! Needless to say the ‘ambiguity’ helped both him and the company to come out of the difficult situation at that juncture.
Meanwhile there was absolutely no improvement in the affairs of the company. In fact there was another shocking development. The company had opened a current account with us for payment of interest warrants on its debentures. One fine day we found it running into debit balance (overdrawings)! As the warrants had been issued payable at par at our branch under an arrangement with HO, there was no way we could dishonour the same. Actually the company should have provided funds in the account before issuing the warrants. But it appears that it had not disclosed the actual amount to the bank before issue. On enquiry we were told by the company it would provide funds from the rights issue proceeds!
The rights issue opened with a bang. There was overwhelming response from the shareholders and it was heavily oversubscribed. Those who got the allotment made a killing in the market as the premium in the market was nearly two times the issue price. The issue proceeds were pooled at our Bombay branch. The company requested our bank to be the bankers for refund of excess subscription. It submitted a request to our branch for the purpose as the refund warrants were to be drawn on our branch payable at par.
As per the procedure, the sanction had to come from the HO basing on the recommendations from the branch. This aspect of recommendation was supposed to be handled by the Manager at the branch, as Corporate Cell was dealing with only the credit matters. But the SM wanted to push it to the Corporate Cell. It became an internal issue. The hesitation was in view of the earlier bad experience in respect of debenture interest warrants. The account had ended up in debit balance as mentioned by me earlier.
The DM was ultimately obliged to send the recommendations somehow. But the Corporate Cell was kept out of the responsibility. The company provided funds from the pooling branch in Bombay and it covered the amount of refund orders as mentioned in the company’s letter. Soon the refund orders started pouring in for payment through the clearing house and from our notified branches. One fine morning we found the amount of refund orders presented on that day overshooting the balance in the account by a few lakhs! It was uncertain as to how much more refund orders were still in pipeline. However, it was obvious that the company had not disclosed to us the actual total amount of the refund orders issued. It was also not clear where the balance proceeds of the excess subscription amount had been placed by the company. As far as the branch was concerned another storm was just brewing!
------- (To be continued)
A V Krishnamurthy

Friday, February 7, 2014

My Days South - Episode No.6

The readers may be wondering what might have happened when we ultimately met the CMD at his chambers on that dramatic day. To be frank, I expected it to be not much different from what happened at the Secretariat earlier. But facing the topmost authority of the bank fully knowing that he had not appreciated the report on the company could have been the toughest proposition for me. But I was left wondering about the scenario just like the readers of my story. It remains a matter of imagination till today because the meeting never took place! The CMD became so busy that the DGM ultimately asked us to go and told us to get back only if we were intimated again.
My experience with the DGM at the Secretariat made me think on one particular aspect of the report prepared by me. Even though the DM made it very clear to the DGM that the report was prepared at his instance, I could make out that the primary responsibility for the contents of the report was being fixed on me. By asking me to handle these files exclusively, the DM was relieving one layer of persons below me from the responsibility. In the normal course, the officer handling the file was responsible for the basic information provided in the report. My responsibility would have been secondary along with the SM and the DM. The real intention of the DM was to protect him on a future date, as he was confident of my ability to meticulously report all the irregularities in the account. But in the process he was putting me in the frontline – at my own peril of course! This fact had been proved by the conversation we had with the DGM earlier.
While coming back from the HO, I asked the DM the advisability of continuing with the fortnightly reports. He straightaway told me to continue. Actually the conversation with the DGM had made one thing clear. The report was factual and there was absolutely no dispute on its contents. By placing all the irregularities on record, the branch was making it clear that it could not be held responsible for the account to go bad at a later date. Any sanctions given in spite of the irregularities would only be at the full responsibility of the sanctioning authority. The DGM at the Secretariat had been annoyed by this fact when he dubbed the report as an ‘inspection report’. He could not digest the fact that the branch was putting the onus on the CO/HO!
As it turned out later, it was this single fortnightly report that saved the skin of several branch officials during the ‘post-mortem’ of the account. I continued submission of the report till I left the branch three years later. After some more years the account became totally sticky. A special team from the Circle Office was asked to conduct an in-depth study to fix the responsibility. The report came in handy at that time. The team concluded that there was nothing that was not known to the sanctioning authorities while continuing and sanctioning additional limits. It also found that all the adhoc facilities and deviations from sanctions were having specific sanctions from the relevant authorities. It gave a clean chit and absolved the branch officials from the primary responsibility, which would have been otherwise fixed on them as a matter of routine!
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I had earlier made a mention that the company was reported to be coming out with a rights issue of shares shortly. We received an official intimation from the company to the said effect along with a copy of the prospectus. We came to know that our bank had been notified as the bankers to the issue with due permission from our Head Office. The positive side of the development was that the company would have funds at its disposal to clear the overdues in the bank.
One of the requirements for the rights issue was that the company had to furnish the performance in the latest quarter (Apr-June in this case) in the prospectus to enable the shareholders to take a decision based on the same. I went through the same and found to my astonishment that the company had shown sales of nearly Rs2 crore for the quarter even though it had sales of only around Rs50 lakh in April and May as per statements given to the bank. The proceeds of the said sales were also not reflected in the bank accounts as we found out from the records.
I had a discussion with the DM and SM. The company had held back the stock statement for June and the quarterly information data for the Apr-June quarter even though they were overdue. We called the Finance Manager of the company for a discussion. He told us that the same were under preparation and will be submitted shortly. When asked about the sudden jump in sales, he requested us to await the statements.
I have earlier mentioned that the Corporate Cell had been provided with excellent staff even at the clerical level. Hardly one week later Mr.Madhusudan who was handling these statements came rushing to me with the statements given by the company. He told me that the company had shown a sudden jump in sales to the extent of Rs1.5 crore in the month of June! He said he could not appreciate the same as they were not reflected in the company’s accounts with us. Our bank was the sole bankers to the company.
We had a detailed discussion with the DM and SM. We were quite aware that the company had no resources to generate such sales in a particular month in the absence of the requisite raw material. It was also not clear as to whom the said sales were made as no bills had been submitted to the bank for collection/discount. As the bankers to the rights issue it was important for the bank that the data given in the prospectus was accurate.
The Finance Manager was called for the discussion once again. He stood by the statements telling us that the sales had actually taken place. He also told us that the company had sold the stock on consignment basis to a single party in Bombay. We could not countercheck the same from excise duty records as the company’s products were totally exempted from the duty.
We then asked the company to furnish us the stock dispatch records including the consigner copy of the lorry (truck) receipts. The DM instructed me to visit the company’s office for verification. The company took two days for the purpose. When I ultimately visited the office, the company official produced an entire set of consignor copies of lorry receipts. The entire lot was from a single book and one could easily make out that they were written in a hurry on a single day. Even though the lorry company was in the bank’s approved list, the transactions appeared to be quite suspicious on the face of it. As per the receipts, the entire stock had been dispatched to Bombay to a single client who appeared to be a proprietorship firm.
Our DM had by this time reported the matter to the DGM of the Circle Office over phone. The matter became so serious that the DGM visited our office for a discussion by the time I came back from the company’s office. He was anxiously waiting for my comeback. When I told him about the serial consignor copies of the lorry receipts, he thought there was need to make further investigation. He told the DM that the branch may have to depute a person to Bombay to verify the stock at the consignment agent. He left the branch after some time.
The DM immediately made out a letter to the DGM covering all the aspects of the company’s sudden jump in sales. He recommended for an inspection of the stock held in Bombay at the consignment agent’s godown. Even though he did not tell me officially I could make out that he had mentioned my name for the purpose in view of my seven-year experience in Bombay Inspection Department.
The task was expected to become a virtual nightmare for me. I was 100 percent sure that the company could not have practically dispatched that much of stock to Bombay. Naturally it would not be in a position to show the physical stock to me. But what exactly could happen at Bombay in the absence of stock could be anybody’s guess. As far as the company was concerned it was a matter of making its rights issue a success. I doubted whether I could come back to Bangalore in a single piece! Even if I came back I was not sure what kind of report could I submit in the background of what happened earlier at the CMD’s Secretariat. Indeed I was facing the toughest situation in my service at that juncture.
------- (To be continued)
A V Krishnamurthy

Sunday, February 2, 2014

My Days South - Episode No.5

One of the files the DM wanted me to handle exclusively was that of a company called XYZ Company Ltd. He wanted me to go through the file on a priority basis and get thoroughly updated. The file was earlier handled by the Accountant Gupta. The name of the company appeared familiar to me. The moment I started going through the file, I remembered that the company had come out with an initial public offer (IPO) about a year back. The issue had attracted huge subscription and only some lucky investors had got the allotment. As far as I knew the Rs10 shares were being quoted at a price of around Rs40. That was quite a good quotation for a new company, which had just started commercial production at the time of issue.
But the dealings of the company with our bank gave me a different story altogether. I found the accounts of the company highly irregular with overdues under different heads. The company had also entered the exports field. But the very first shipment had been rejected by the client. The total liability under various working capital accounts was incommensurate with the sales of the company. In spite of all the irregularities the bank had continued the facilities. There appeared to be no genuine efforts from the company to clear the overdues with the bank.
There was another great surprise for me. The promoter of the company had overdue loans with our Abdul Rehman Street (A R Street), Mumbai branch. In fact I had visited the said unit during my inspection of the branch way back in 1978. The then Senior Manager of the branch Mr. K R Nayak, a strong man, had been able to recover a major portion of the overdues with his firm handling of the account. I could not understand how the same promoter was able to get the sanction for huge limits at our bank after about ten years.
The DM told me that the account was very sensitive. The promoters had the right connections to get the sanctions and I had to ensure that all the irregularities in the accounts are regularly reported to the Circle Office. It was also important to ensure that any additional facility was always backed by a sanction and all telephonic sanctions are confirmed in writing and preserved properly. He even asked me to hold an additional copy of sanctions in a separate file under lock and key.
I made a careful study of the file and listed out all the irregularities in the accounts. I opened a separate register to note down the position of all the accounts of the company and started monitoring the same. I also went through the various feedback statements submitted by the company including stock statements, monthly select operational data and quarterly operational data.
As if by coincidence, right at that time the branch received a letter from the Circle Office asking for the submission of a fortnightly report on the dealings and state of affairs of company on a regular basis. The letter highlighted the fact that the company had huge overdues and irregularities in different accounts that needed close monitoring. The letter also mentioned that the Circle Office had been asked by the Head Office to send a report to them based on our report.
Basing on the study already made by me I prepared a comprehensive report on the company’s financial position and the dealings with our branch covering all the irregularities in the accounts. I also highlighted the fact that the company had problems right from the time of opening the account with our branch. Both the DM and SM went through my report and agreed that it gave a true state of affairs of the company. The SM asked me to work out the deficit in the security position of the account. The same was worked out by me by deducting the total dues of the company from the total of stock and book debts (realizable current assets) declared by the company. The deficit arrived at was substantial against the total dues of about Rs5 crore.
We submitted the first report to the Circle Office. Meanwhile there was absolutely no improvement in the overdue position and the company was just managing to run the unit and pay the salaries and wages. I had reported at the branch in the month of June and the company had declared total sales of about Rs50 lakh in the months of April and May. We also came to know that the company was launching a rights issue at a premium in the month of August.  
We submitted the second fortnightly report to the Circle Office. There was no improvement in the position as compared to the previous report. Hardly a week later, our DM received an urgent call from the Secretariat of the CMD. He was asked to meet the CMD immediately. It was about 2 PM in the afternoon. The DM asked me to accompany him in his car and we proceeded to the Head Office straightaway. On the way the DM told me that the MD of the company was waiting for an appointment with CMD at the Head Office. The DGM who was in-charge of the Secretariat wanted us to meet him.
We met the DGM at the Secretariat. He appeared to be quite disturbed. I was meeting him for the first time. He looked to be a rude personality. He asked the DM as to why the branch was creating problems for the company. The following was the conversation:
DM: Sir, let me introduce the new Manager to you.
DGM: (Merely looks at me with an expressionless face!)
DM: He has worked as Credit Manager at the Canning Street Branch under Mr. B R Nayak. On his recommendation, the DGM has posted him to our Corporate Cell, Sir.
DGM: Is it so? What exactly he is doing right now?
DM: I have asked him to focus on certain sensitive files including that of XYZ Company, Sir.
DGM: Well Mr.…..Your name?
DM: Sir, you cannot forget his name. He is your namesake, sir!
DGM: Oh! I see! Bye the bye, what is this business of fortnightly report, Mr.Murthy?
DM: Sir, I asked him to prepare the report in detail listing out all the irregularities as sought by our Circle Office. He is well experienced in the Inspection Department having worked for seven years in Bombay, Sir.
DGM: Oh! I understand now! Well Mr.Murthy, it appears to me that you are thinking that you are still in the Inspection Department! Am I right?
DM: (Tries to explain. But the DGM is not in a mood to listen)
DGM: Let me tell you. The report is nothing but an inspection report. The CMD is not at all happy. Anyway you may meet him, when he calls you in.
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The situation appeared to be quite unnerving to me. I had met the CMD earlier at the Canning Street branch when he had come on a visit to Kolkata. But the circumstances there were quite different. I always felt fully protected under my DM B R Nayak there. Here it was a different story altogether. I even felt I may be shunted out to a God-forsaken place. We sat there anxiously waiting for a call.
------- (To be continued)
A V Krishnamurthy