Tuesday, August 5, 2014

Lesson From Syndicate Bank Bribery Case

Bribery Case of CMD of Syndicate Bank which came to light  is not astonishing to any banker who is well acquainted with internal culture of public sector banks. During Congress Party rule only flatterers got chance to get posting as ED or CMD of a bank, only blind followers of some Minister or Congress Party could get chance to become a director in a bank or in public sector undertaking. And when a head of a bank is corrupt and has got the posting by dint of evil ways and means, it is but natural that they will indulge in corrupt practices , they will prefer like minded corrupt people working under them  and they will promote the same evil culture of flattery and bribery. This is why a good number of corrupt officers are now sitting at top posts of every bank. When the boss is corrupt , none of juniors working under him can dare speak the truth and none can stop bad lending .

In the past too, several instances of bribery at top level has come to light but unfortunately all such cases used to be put under carpet and buried for ever. Dishonesty became the policy to prosper in career. Honesty became victim of gang of dishonest persons sitting at top posts. Good performers who did not believe in flattery and bribery are usually and invariably  sidelined and posted at remote and critical places. And this is why ultimately these honest and good performers leave the idea of getting promotions and they do not take part in promotion processes taking place in the banks. They know very well that only officer who have backing of top boss can get success in promotion processes.

As such the bribery case of CMD of Syndicate Bank should not be treated in isolation but should be an eye opener of new government formed by Sri Narendra Modi. Government can imagine how much deep rooted is the disease of flattery and bribery that a person like Mr. S. K. Jain could got promotion in each process leaving behind  numerous other good performers. 

I hope the government will look into profiles of all directors , all CMD and all EDs of all banks , retired as well as working, to assess and ascertain what level of corruption has been going on unnoticed since long. Government should peep into files of rejected officers to know whether these rejected officers are really poor in skill. They should peep into each CMD , ED, GM and DGM at least to know whether they were really good performers when they were in the field. Government should try to understand why health of banks was to a great extent better when promotion of an officer used to take place strictly on the basis of seniority . To punish one CMD of Syndicate Bank only will not be enough to stop malpractices prevalent in these banks

There are hundreds of senior level officers like GM, DGM, AGMs and CMs who still believe in flattery and bribery. This bad culture has damaged the health of bank badly. Sincere bank officers have stopped participating in promotion processes only because they understood the funda of promotions and good posting. Good officer do not like to become Ashok Khemka and hence they keep mum even when seniors indulge in bad lending. They do not dare blow the whistle because they know the character of Vigilance Officers and they know the mind-set of officers who control and who write their appraisals.Government should try to go deep into story of bad debts and only they can find out the reasons for growing bad debts in public sector banks.

Government can recover the money from bad borrowers only when they know the root cause of growing bad assets in banks. If they treat the root cause of sickness  as medicine to cure the sickness in the system, they can not dream of any improvement but they can further damage the health of these ailing banks.

Government will have to focus on rising volume of fraud and malpractices going on in recruitment and try to find out why there is uptrend in fraud and bad asset volume. Government should stop so called merit oriented policy of  promotion processes of these banks which has made these banks sick of bad assets. They will have to punish seniors who indulged in malpractices in not only in lending but also in promotion and recruitment. They cannot visualise reformation in real sense until they take care of Human Resource. If they continue to put carpet on each exposure of top officials , they cannot imagine of stopping uptrend in  bad asset and there is no doubt that loss due to fraud will  continue to grow.

Government will have to stop bad lending at least from now to stop further escalation in volume of NPA and further erosion in capital  of these public sector banks. They will have to see how inexperienced officers are posted as Branch head when experienced good workers are available in their stock . They will have to see how officers with two three years experience are promoted whereas officers with two to three decade long experience are rejected and forced to work under unskilled and inexperienced officers.

Bitter truth is that management of PS banks is following the same bad path as they used to follow during previous government. Finance Minister Sri Arun Jaitley and Prime Minister Sri Narendra Modi has to be cautious and refrain from few Chamchas of Banking industry who misguide the government for their self interest. There is no doubt that all organisation fail only when they shut their eyes and ears and become dependent on a few chamchas.

Economic slowdown or global recession may to some extent affect the repayment of loans but not always and in all cases. It is the need of the hour to make case by case study of all bad accounts and all top officials and punish a few top officials to send a message among rank and file down the line and only then real reformation can take place.  Good people with good  knowledge and experience can only run a branch of a bank. It has to be kept in mind that under similar and same conditions private banks are showing better and better growth and they have least NPA.

Officers who are hurriedly promoted to scale IV or scale V in ten years can never be better than an officer who has sincerely worked for decades without tasting the fruits of promotion. It is only in banks that promotions are totally arbitrary and whimsical. During sixties, seventies and even in eighties, officers with 7 to 15 years experience in banking and exposure in all departments could  only dream of getting first promotion and posted as Branch Head . Now a days in span of 10 years one can 3 or 4 promotions if he has backing of bosses. 

Even in army seniors are given chance in the order of their joining until they are found to be indulged in some unethical and illegal practice. In army , an officers even on the verge of retirement can be promoted. Even in judiciary, a judge is allowed to be promoted to become Chief Justice even if his time of retirement is due in a few days or in a few months if he is senior and his work record is unblemished. On the contrary , officers whose retirement is due in two years are not promoted and officer who are too junior are given chance . This mismatch of Human resource is hitting at the root of the work culture in PS banks. I hope new government will look into intricacies of HRD and take remedial step without delay.

In service industry like banks, experience is of utmost importance and should be reckoned with as best quality of a banker while considering him for elevation in career. Academic qualification has little role and lesser role in bank than practical knowledge . I do not mean to say that illiterate can do better but I think even graduate qualification is enough provided the person has enough skill of treating customers and enough knowledge of safeguarding bank's interest. Unfortunately in banks, experience and length of service has nothing to count with. Management of banks like youth as if they have to fight on borders with enemy countries. 

Brothers held in bank CMD ‘bribe’ case earlier questioned on murder-Indian Express

The Godha brothers arrested by the CBI on Saturday for allegedly accepting a bribe of Rs 50 lakh on behalf of their brother-in-law and Chairman and Managing Director of Syndicate Bank S K Jain are no stranger to controversy.

While Vineet Godha is a former Congress spokesman and legal cell in-charge, Puneet Godha is one of the main real-estate developers in Bhopal.
In 2007, the two had been questioned for days by the police in connection with the murder of a builder and small-time journalist, Pawan Jain ‘Vidrohi’.

Vidrohi and his driver were shot when they were on their way back from Vidisha, where he and the Godha brothers had business interests. The brothers were later given a clean chit by investigators, including the CBI to which the case had been passed.

 For some time after that, the Godhas kept a low profile, but their clout never diminished.
Vineet is believed to be close to mining baron Sudhir Sharma, the BJP’s former education cell in-charge now behind bars for his role in the MPPEB scam, as well as real estate tycoon Dileep Suryavanshi, who also has links with the ruling party. An office of Suryavanshi’s firm Dilip Buildcon is located on a premises owned by Godha.

The CBI is now looking for Purushottam Totlani, who allegedly gave the Rs 50 lakh to Vijay Pahuja, the third person arrested along with the Godha brothers.

Vineet has appeared in many cases involving Congress leaders. He is currently representing former leader of the Opposition Ajay Singh in two defamation cases, one of them filed by Chief Minister Shivraj Singh Chouhan and his wife Sadhna Singh.

On Sunday, S K Jain, the Godha brothers and Pahuja were remanded in CBI custody for four days. Also remanded were CMD, Prakash Industries, Ved Prakash Agarwal, Director Vipul Agarwal, chartered accountant Pawan Bansal and Pankaj Bansal.

The Godhas live in a huge bungalow in Bhopal’s Arera Colony locality and own a fleet of luxury cars. Their father S C Godha is a prominent lawyer with expertise especially in land deals.
Vineet was appointed PCC secretary when late deputy chief minister Subhash Yadav was the state president. He later became a party spokesman.

Puneet is associated with Vardhaman Construction, which is developing a slew of housing projects across Bhopal.

The brothers’ lawyer Subhash Bhattacharya said his clients had been framed. “No money was recovered from them. In any case, they are private citizens and can’t be booked under a law meant for public servants. Moreover, the Supreme Court has recently held that immediate arrest for offences punishable up to seven years’ jail term should be avoided, and the police should record reasons if the arrest is necessary,” Bhattarcharya told The Indian Express.
The lawyer had sought bail for the brothers in the Bhopal court but they were sent on transit remand in CBI custody. Bhattacharya said he will oppose the agency’s remand application on Monday.

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