I think most of us have read the news that a case has been registered a case against :-

(a)   Shyamal Acharya, Deputy MD of SBI,  who is also the head of Mid-Corporate wing;

(b)    KK Kumarah, Ex-Assistant General Manager of SBI, who was working as a liason agent for Worlds Window Grouop;

(c)    a businessman Piyush Goyal (founder of the Delhi based Worlds Window Group - an industrial group which imports ferrous and non-ferrous metal scrap, manufactures aluminium composite panels (ACP) and runs India's biggest private inland container depots.)

for alleged graft.  It is a sad day for bankers as the reputation of bankers, in the eyes of general public,  has gone down one step more.

It is reported that  CBI conducted raids at offices and residences of Shyamal Acharya (serving top executive of SBI), KK Kumra (Ex-AGM of SBI) Piyoosh Goyal (a businessman). According to the report published in Mumbai Mirror  “Gold and jewellery worth Rs 67 lakh, forty bottles of scotch, and documents showing benami purchase of 10 kilogram of gold were found by the Central Bureau of Investigation at the Napean Sea road residence of deputy managing director of State Bank of India Shyamal Acharya, who was booked on charges of bribery.  CBI during the raid also is reported to have seized an imported pair of watches worth Rs 8 lakh.    It is reported that Piyush Goyal allegedly gifted the watches to Shyamal Acharya to get his credit limit from the bank increased.  Mr  KK Kumra, appears to have worked as a conduit (liaison agent) between receiver and giver of the bribe and actually delivered the watches.

Worlds Window has a credit limit of Rs 250 crore with a consortium of banks including SBI. The bribe had been paid to raise the cap to Rs. 400 crore to fund the company's ongoing expansion plans. SBI's contribution to the increased credit was to be Rs 75 crore. 
 

[In days to come more details / facts will emerge]

The above news was shocking but did not surprise much as every banker is aware that corruption has seeped deep into banking sector too.   Although a majority of the bankers are still honest, yet last few years have seen erosion in the percentage of honest bankers.   

The above news has created a big dent in the reputation of SBI.  Now question is, what are the lessons to be learnt from this episode.    I feel the following lessons are to be noted by all bankers :-

(a)   The practice of employing retired Bank senior officials like CMs, AGMs, DGMs, GMs and sometime even EDs and CMDs  by private companies as liaison officer needs to be stopped.  When I took VRS from the post of AGM, I too was asked about my future plans, and were given feelers by some to work as liaison officer for some company to earn handsome income.  I was already aware of the nature of work done by such agents, and thus strongly resisted all attempts and told that it is not in my blood to do such a work, as had I to do such a thing, I would have continued in the Bank at least till my retirement.   I am aware of many DGMs / GMs who have opted for such jobs to earn easy money.   However, by getting loans sanctioned without merits, they are actually encouraging not only corruption, but also party to the ever increasing NPA in banks.   There is a strong need for banks to deliberate on this issue as to how to stop entertaining the credit proposals being pushed through by retired officials by receiving commission / fee.

(b)   Secondly, at the time of promotion, there is a need to find out the life style of the senior executives.  Banking industry is the only industry which directly deals with money.  Thus, there is a need for more stringent rules in profiling the officers.  People who are extremely found of wine, jewellery, women,  needs to be double checked for their honesty in the past.  Executives who are fond of jewellery, high value commodities (like watches) and wines are easy target for the businessmen as they are likely to become corrupt at first available opportunity to enjoy such a life style.   To amass wealth beyond a particular level is like a disease.  We need watches to check the time, which is now a days available even on mobile.  Except officers / workmen who have inherited wealth and declared the same to bank,  no banker can afford to have watch of few lakhs  rupees.  A banker with such style  is likely to turn corrupt as these are beyond his means.   Personally speaking for last few years, I hardly wear a watch as I use my normal mobile to check the time as I feel it provides me much more accurate time than a normal watch.  However, I do not mean, bankers should not wear a watch, but a watch of say above Rs 20,000 can be rarely be afforded by a banker or his spouse.   Some bankers are certainly not likely to like that bank should do such a profiling, but honest bankers will certainly welcome this move.

(c)    There is a growing trend to rope in middle men in the loans being sanctioned these days.   There is a growing trend in last decade or so that most of the big loans are routed through agents, some of them through professional CAs.   I still remember, when I was CM at a Branch,  our Zonal office / Circle Office used to call meetings of  agents / CA at 4 or 5 star hotels and  asked all Incumbents to attend the same to garner business.   Such meetings encouraged many agents to roam around branches and find out Managers who are ready to take bribes and sanction loans based on tailor made documents / balance sheets.   I do not see anything wrong if a genuine CA  is contacted by Managers to get certain clarifications on Balance Sheets.    But liaison agents work as middle men for negotiating and transferring black money should be avoided at all costs, even if it means loss of business.   Middlemen encourage corruption and bribe as it is safe for both the parties – Incumbent and the Borrower to indulge in corruption through such men. 

 In case there are corrupt officials even at a higher level, it becomes much easier for them to ensure that such honest people are transferred by dubbing them as non performers.

Based on my personal experiences and the feedback we receive through our website, SBI is considered as much less corrupt than many other nationalized banks.  I can say that it is becoming more and more difficult for an honest banker to survive and move up in the ladder.   I am witness to the fact that top executives who were perceived to be highly corrupt by a general banker in the field, got the fastest promotions and are now CMDs, EDs in public sector banks.  Their stories of corruption still go around.