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
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