MY FEW PROFESSIONAL EXPERIENCES IN BANKING
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(In the above photo Bank loans to Self-Employed)
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CHAPTER-1
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FINANCING A SMALL POWER LOOM ENTERPRENURE
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Surat City in India is known for its power looms industry. One third of power looms industry of India is flourished in this historical city. Our bank was situated in the heart of powerloom industry. However as per guide line drawn by our bank we were more interested in financing the small power looms entrepreneur owning two to eight power looms. Accordingly we financed so many entrepreneurs.
However there was a case we had financed very small power loom owner who owned two to four looms. He was strongly recommended by local member of the municipal council. The borrower was a very poor man coming from local backward community. He could not offer any substantial security except a government permit, which was given to him for yarn quota. We gave small loan of rupees two thousands for repairing his looms against the deposit of said permit, which can be transferred against the consideration as per market price. It was finance in the priority sector and under social banking in terms of Indian banking. Besides that these type of loans are given at low rate of interest and the government guarantees 75 0/0 of the loan amounts. However the failure of such loans carry the same standard for manager's performance as for big loans. Hence manager is supposed to monitor those loans very vigorously
Accordingly in the process of monitoring we found that no monthly installments and even quarterly interest was also not coming through. The borrower was also not responding to our notices and reminders. Even the sponsorer of loan who was one of the very influential personalities of the city was not ready to extend any help. Hence we decided to meet borrower personally and we called on him at his business premises. The things were not favorable for the bank. He had already sold one of his power looms and another was not in working condition. We found on enquiry that he had spent most of the money in drinking and bank was in very pitiable condition regarding recovering of the loan.
We had only one course to recover our money by selling his permit and adjusting the sell proceeds against his outstanding loan amount. He was not ready to sell his permit, which is the only source for generating further money. We asked him what he wants to do for his future livelihood. He said he wanted to buy cart to sell foodstuff on mobile shop.
We explained to him that he could buy the cart and pay back the bank loans with full and final settlement if he agree to sell his permit. He agreed with tears in his eyes and we were satisfied that we recovered our entire loan and he also received his cart in order to earn his future livelihood.
However it was a failure of our mission to make him successful small entrepreneur. Besides that it was a loss of so many man-hours of bank staff. It is better to give such work to social welfare organizations with dedicated social workers. This is one of the examples of social banking in India. If borrower and sponsorer both are not responsible then nothing can happen and it becomes political banking rather then social banking.
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CHAPTERS-2
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HONEST BORROWER
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This is an instance of the same city but with entirely different experience. It was found that borrows were absolutely honest in their commitment to the bank. It was a partnership company where members of the same family were partners. They owned more than forty to sixty power looms but they were doing the business under the different names. They had formed several units as per taxation requirements.
Our bank had advanced more than two hundred thousands rupees to those firms. They were doing well in their business. Their stock and machinery secured our advances. However we had no control over certain transactions which are not reflected in their balance sheet. They use to borrow extra money unofficially from the private financier at very high rate of interest. It was done in order to protect them from fluctuation of the market prize of yarn and to increase their profit margin. However they had overlooked that high rate of interest always increase the burden on the business and private financier are good weather friends and can withdraw their finance at short notice.
In the view of above the pressure on the firm started increasing and they could not stand against the pressure. They started defaulting in their commitment and that private financier started attacking them legally. This was happening without our knowledge. They had not informed us about the development because they were afraid that they would loose their credit before us.
Consequently we may also recall our advances.
However when creditor started attacking legally all their assets includes the assets, which were mortgaged to us. They were worried and as a good borrower they rushed to us. It was very let hours when main partner of the firm came and informed us the critical situation. He asked us to come to his firm premises and take the possession of stock and machinery, which is, mortgaged, to the bank. It was nearly late hours at night when we inspected the stock and machinery and took possession of the same by sealing the firms premises.
If the borrower had not informed us and other creditors would have taken the possession of securities mortgage to us then bank would have lost very heavily. It was honesty and sincerity of the borrower had helped the bank. We also appreciated the morality and sincerity of borrower. When the financial storm was over and they restarted their business we recommended to the bank management to help them by way of nursing program. Those units thereafter recovered from the debts and became once again healthy business units. The most important factors for their recovery from sickness are hardworking, sincere and honest nature of the entrepreneur. Therefore people behind any project is the most important then any other factors.
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CHAPTER-3
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CUSTOMER IS KING
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One day one of the valuable client came personally to the bank to see his latest balance in the account. He wanted to issue the check for his bushiness transaction. Those days we had no computer in the bank and all transaction were handled manually. He inquired with one of teller what is a balance in his account?
'Just wait do not you see I am busy.' Replied the teller were rudely.
'Sir wills you please tell me what is balance in my account? 'Her asked again to the clerk in very angry tone as he felt he was being ignored or neglected by the teller.
'Sir it is rupees-------'said the teller in very loud voice.
'What do you say? Please kindly checkup again.' He requested teller again.
Why do you unnecessarily bothering me? Once I conveyed you are final.
'As you wish' customer was very much disturbed, because the balance was more then what he has expecting. However looking at the rude behavior of teller he got -very much angry and he decided to withdraw from his account as per teller 'version of his Balance. He decided to teach a lesion to the bank 's teller. He withdrew the money and thereafter he never turn up. The customer was very much annoyed with the behavior of teller. Even the said account became dormant.
At the end of the month when office was reconciling the account they found that particular account was overdrawn. Our staff started reminding the customer to repay the overdrawn amount, but there was no response from the customer. Our headquarter wanted that we should see that all account are reconciled and certificate to be submitted accordingly. Ultimately they came out and declared that said amount was unrecoverable. Therefore as chief of branch I went to the business premises of the said customer.
'How is your business is going on? If you require any finance please let me know?' I asked him in a natural manner.
'Sir with God blessing everything is going very well. Our profit and turnover have doubled.' He replied smilingly.
'Why your account is dormant?' I asked him.
'We are not operating our business with your bank. We have shifted our business to other bank that is giving better services.' He replied
'I never knew about the same. What is a reason for leaving our bank?' I asked him.
'You may ask your rude teller who does not know how to behave with the customer. 'He
Replied it very curtly.
You should have complaint to me I would have redressed your grievances.' I told him
'Sir we have no complaint against you. I only wanted apology from your arrogant staff.
'I have nothing to loose only bank will loose a good a customer.' He told me in an angry
tone.
'Dear friend you are loosing your good credit by overdrawing your account unauthorised.
You must pay the overdrawn amount forthwith otherwise it will reflect on your credit. 'I warned him.
Sir it will be done immediately as soon as your teller submit his apology for his misbehavior.'and he categorically ask for apology.
I apologize you on behalf of our staff. I will very much appreciate if you continue your
Business also with us' I requested him.
My strategy works very well and he came down from his demand and said 'Sir there was no intention for asking your apology. This is a check for your overdrawn amount and I assure you that we will re sift our whole business with you.
We thanked him and he treated us very well in his office.
On return to our office I fired the said employee for his indiscreet behavior, and advised our staff to treat our customer as a king and to think that they are always right. That is a key of successful business development.
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CHAPTER-4
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SMART CUSTOMER
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It was time when we were organizing a new branch of the bank. There were more then dozen branches of other banks with tuff competition. One day one well dressed and polishes mannered gentlemen entered in my office.
'I have heard lot of things about your neck for business development. Sir you done very well in a short span of time.' He complemented me with all type of flattering words.
'It is my duty what I have done for my institution. You must know that I am paid for the same. However please let me know what can I do for you?' I asked him.
' Sir It will be my privilege to do business with you. I am having a very good business with more then one hundred looms. I have a very good factory premises and office in the heart of industrial area of Surat. I will very much appreciate if you visit my factory and see your self-what industrial activities I am doing' he said in a very pleasant manner.
'What is your expectation from us? I asked him straight question.
'Sir first of all you see my business and then if you find it satisfactory you may give me some temporary facilities pending final sanction from corporate office.'he replied
'Let me see your business then we will decide about it,' I talked to him tactfully
Accordingly next day I visited his factory premises, and I found those things were well maintained. I requested him to open his various firms' accounts with us and he complied with my request immediately. He once again came to my office after few days and asked me' whether he can get some bill discounting facilities on his various firms accounts?'
'How much you want in each accounts?' I inquired with him.'You may give me facilities in my each accounts upto your discretionary powers.' He requested me.
I discounted his bills drawn by various firms upto more then Rupees one hundred thousand. He was very happy and he left our bank. I was also happy that we added one good customer to our bank. Next Day we had a meeting with Manager of one of a prestigious banks and we started exchanging the information regarding our new customers. The said manager asked me the name and address of my new customer. I gave him the information accordingly in order to protect the interest of the banks he told me ' Oh my boy you have cached very big fish.'
'Why are you sarcastic about it? I counter questioned him.
Dear friend your new customer is having millions of rupees liability with us. His all bills drawn on outstations and which are purchased by us are returned unpaid' he replied
'What do you mean? 'I asked him
'You have been booked in your enthusiasm in promoting further business.' He told me very bluntly.
'Lets see what happens. ' I replied him confidently. However I was little bit shakeup within.
I was worried regarding the money, which we have already extended. Next day I enquired with my office regarding the fate of those discounted bills. It was found that few bills have been paid. I asked the office to get the money by wire transfer. Besides that we stop giving further facility. We had also asked our out station branches to see that they peruse the drawee of the bill in order to remit the funds urgently. I knew that our new customer wanted further facility so he will see that first instant all his bills are paid. He will also do so in order to create strong confidence in us. I wanted to take advantage of his strategy in order to recover our money. My presumption came true and next day our smart customer came to me with few more bills. I told him that ' Bank will further discount your bills as soon as first lot of bills are paid and realized. It is very much necessary for sanctioning the permanent facility by our corporate office. The failing which you will loose your credit.' I advised him tactfully. He was also rationally convinced with my advice.
'Sir I will send intimation to drawees directly to see that they make payment of those bills urgently' he promised me.
However once defaulter to one bank can become defaulter to any bank. It is very difficult to trust such customer. We recovered our money and thereafter we stopped dealing with him because he has lost his credit and he was smartly and desperately behaving to extract further money from any sources. There after we came to know that he could not fulfill his commitment to his main Banker.
In short we have to be more cautious in dealing with the smart and unscrupulous entrepreneurs.
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CHAPTER-5
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PROMOTION OF SAVING FROM BOOTLEGGERS AND GAMBLERS
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'Dear guy take any amount from this and get lost' said Godfather of the Area
'Yea as you wish.' said Janak and started collecting the amount. He picked up as Many as currency notes as he can carry on that day from the big collection of currency notes lying on the floor.
'You have to count it carefully. If you commit any mischief regarding deposit of this money you will pay It.'said the Godfather.
Boss I want to live in this city. I know what you can do and undo.' Replied Janak with smile. He quietly left the place without talking much with his boss who was in charge and control of all antisocial activities of that particular area of the city. However after hearing all this bad words he was the best source business from those types of customers.
It is a very interesting story, which was told by my pigmy deposit agent Janak, who was one of our best pigmy deposit agents of the bank. We were very much interested to know that how he canvassed the highest business in the area. Besides that how it is that he is arranging so many loans per week against said collected amount.
He narrated the above incidents to us how and from whom he collect the amounts.
He added further that certain illegal activities are being carried out under the nose of law enforcing authority. They have to be paid fixed protection money on weekly basis. Therefore those loans are arranged for those payments out of deposit money lying with the bank.
It is a very interesting scheme under which the bank agents collect the money from the residence or office premises of various customers and deposit in the bank. Even the loans are granted against said deposit amounts in case of need. The agents are also given the commission on the average weekly collections.
The main aim of this scheme is to tape the saving which will never come to the bank. However if bad people in the society also wants to take advantage of the scheme no body can stop it. Our dynamic agent had found a way to bring a dead resourses to life and to merge it with main stream of banking. He was also rewarded handsomely by very good commission, which was more, then a salary of highly paid bank manager.
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CHAPTER-6
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BANK'S MONEY IS A EASY MONEY FOR AWILLFUL DEFAULTER
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It was a warm afternoon of New Delhi when my self and my Assistant Manager landed in a middle class locality of the capital city of India. We knocked the door and one attractive lady with lot of jewelry on herself opened the door. It was a well-furnished house with a bar in a living room. She immediately recognizes my colleague and told him in a soft Hindi language
"Oh how that you are here?"
"Mam he is our new Manager. He just wanted to meet your husband. " He formally introduced me to the host lady.
"Why have you taken troubled to come here? My husband would have come to your office on being informed about the arrival of new Manager." She replied very politely.
" We have already sent several reminders to you people but you have not responded it. Therefore we are compelled to visit your place. Besides that the amount outstanding is also not much significance in context of your financial position. We have brought documents also for your acknowledgement. Please kindly signed it and make arrangement to pay outstanding amount immediately. You are well aware that it is overdue since longtime." My Assistant Manager requested her.
"Sir you are welcomed but all signing business is handled by my husband and I am not going to signed any documents without his permission. " she left inside and brought some drinks and food.
"Sir take it and enjoy it. Our financial dealing will continue."She said softly
"Madam you are also borrower in the transaction and what is wrong in giving your akowledgement? Besides that you people are not responding any of our legal notices. I can see your financial position is very good and your standard of living appears to be very high. We have not come here to enjoy your hospitality but we mean business. I feel you are capable of paying your debts but willfully avoiding it." I gave my mind in a very strict voice.
"If it is so then why do you worry about your money" she shot back.
"Please kindly do not take our visit as our weakness. We are here to avoid litigation but if you are asking for it we shall proceed accordingly. You may convey your husband to come to our office along with you in two days to signed the documents otherwise we will proceed further legally against you. Thereafter you will not have any recourse for amenable settlement outsides the court. " I warned her.
"We are very sorry for giving you trouble" she said in a very soft voice.
"Do not be sorry but settle the transaction amicably because I know that you are willfully dragging the matter in order to use bank's cheap money in your other business. However there is a limit for our patience." And we left the place in anger.
She realized that we meant business and she must have advised her husband to pay the outstanding borrowed money immediately. My visit paid a rich dividend and they came to our office next day and paid the full amount with interest. They closed their borrowing account.
My guess was correct that they were willful defaulters because it was cheap money in comparison with private money. Besides that they knew that legal process is slow in India. Some time personal approach and apprising of right view is very much necessary. Even customer also measures that" How far we mean business. ---------------------***-----------------------
CHAPTER-7
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FINANCE TO UNORGANIZED WOMEN
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'SELF EMPLOYED WOMEN ASSOCIATION 'is a world famous organization and which is bank of 'unorganized women'. The President and first lady America are even aware about its noble activities. The Ex first lady of America Mrs. Hillary also visited the said bank during her visit to India. The chairman of 'SEWA' Mrs. Illa Bhatt has been honored with the world famous 'Magasy Award' for her exemplary work in respect of those down trodden women.
However this is my experience with said bank when it was in formation stage. Its mentor Mr. Arvind Buch who was then president of the Textile Trade Union of Ahmedabad (i.e. 'Majoor Mahajan') was also then chairman of this prestigious organization. He approached to all bankers of Ahmedabad for assisting his organization. All bankers responded very well to his appeal by offering several hundred loans. However we decided to go for few loans on experimental basis. It was very simple and small loan transactions but the it was a test of honesty of poor borrowers.
We found it very difficult to recover those loans, as there was no proper co-ordination between members and management of 'SEWA'. It was very funny situation because draught was going on and government had waived all small agriculture loans upto certain fixed amount. However the wasted interest and politicians were misguiding all those poor people not repay their borrowed loans.
Our staff use to go with the documents of loans to those borrowers for collecting the interest and installments.
"We have not borrowed this amount" was a plain answer from each borrower.
"What about this?" our staff will then show them their photographs on the documents.
"You don't know that our Prime Minister has waived all the loans given to poor people". It was stereotyped answers in political language. How to explained those illiterate, ignorant, and poor borrower that they are misguided and ultimately it will spoil their credit.
Even when we approached to the management of 'SEWA' they surprisingly defended them telling that they can not pay, as they are poor people. It was indirect encouragement to their bad instinct.
However it had made work of the bankers very difficult. The banking norms are same for failure of small or bigger loans. Hence many bankers may have suffered at the time of evolution of their performance. In the process the whole banking system suffered for politicizing such loans. The result of which we stopped giving further assistance to those poor women until their whole system is improved. This is a very good example wherein noble cause is being made to suffer on account of politicizing the issue. It was a sad experience of a banker with an organization which became world famous for its noble cause.
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CHAPTER-8
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VERY IMPORTANT CUSTOMER
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It was a very pleasant afternoon at New Delhi. I was attending my casual banking transactions when suddenly one gentleman in full airforce uniform enters in my cabin. In was completely taken back with his personality. I just got up from my chair and welcomed him in my office.
"Sir what can I do for you?" I politely asked him.
"I was passing through here and thought why not to collect some cash from you."he replied
"Why not sir, please give me a check and we shall pay you as soon as possible" I said.
"I do not have time to carry check book with me. However I requires only five hundred which is very small amount." He replied.
"Sir what is your account number?"I asked him in the absence of check.
He started staring at me and said" No body dare to ask me such strange questions? I use to get money without any problem. Have you introduced a new procedure? How can you refuse to pay my money? He asked me so many questions in a very angry tone.
Meanwhile my Sub- manager came and he said in my ear.
"Sir he is very high airforce officer and very special treatment has been extended to him. He is also well-wisher of our bank and very helpful in creating good will for us." I immediately received the message and told my colleague to get five hundred cash.
"Sir it is always pleasure to serve you. However our norms requires to get check for cash. You will appreciate that we are suppose to observe professional discipline as you observe in airforce." I said and handed over five hundred rupees in his hand. He smiled at me and said.
"You are right" I will send you a check as soon as I reached my office.
"Sir No problem, you are welcome." I replied very courteously and politely. However I gave him a message very tactfully and which was received very well.
I was aware that one of my colleagues was giving extra services and that too out side the banking norms. He was doing it in order to develop fast business. However it use to create wrong impression and misunderstanding among customers. Besides that it use to create fall sense of dignity by following wrong banking habits. It is very clear from above incident that you can tactfully handle VIP customer even without spoiling their habits and business.
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CHAPTER-9
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BANKING OUT SIDE NORMS
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"Sir I am in hurry as I have to take delivery of rickshaw immediately" The reguest came from one of the customers of the bank.
" Please sign this papers to unable me to release you loan."replied official.
" Hurry up, please give me important papers immediately, the remaining papers can be executed afterwards." said customer.
"Who will take the responsibility, if loans becomes irregular with defective paperwork's?" Asked bank officer.
"Hey guy you do not trust me " customer asked counter question.
"Ok, take it easy, and let's proceed" said officer. He arranged the loan in hurry pending few papers in good faith.
It was the last time said customer came to the bank. Thereafter he never turns up. The loan became sticky, Inspite of several reminders and follow up.
Bank wanted to inform the transport authority about our lean over the said vehicle. How can we do it? In the absence of a lien the customer had sold said vehicle to other person without our approval. He was in financial difficulties and he could not help it.
It become very difficult to recover our dues and more or less it was a gone case. Therefore higher authority started investigation for fixing the accountability. It was observed that the check was given directly to borrower instead of issuing the check to supplier of the vehicle. Besides that lien was not noted in the office of transport authority. It was concluded that loan was arranged hurriedly out side the banking norm. The customer had taken the full advantage of situation by misappropriating the loan amount and selling the bank security to third party without knowledge of the bank. Ultimately the officer who arranged the loan without observing the banking norms came into the trouble and his professional records were spoil. This is a good example for a bank officers who are working in the unprofessional manner.
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