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Prologue

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Prologue

The story of the Bank of Polampur has been developing in my mind for several years, like a baby in a mother’s womb. Today, I feel the joy and fulfilment of a mother holding her baby for the first time after a long and difficult labour. 
The story of this book is virtually the story of the fictitious Bank of Polampur over the last forty years. God forbid that the state of the Indian banking industry, or even any one bank, come close to being anything like the Bank of Polampur described herein!
Our narrator, Kashmiri Lal Chawla is a simple, straightforward man, who was recruited as a clerk in the bank and retired as a General Manager after several years, during which he needed to use his brains minimally, if at all. Of course, what is mystifying is how the undistinguished Kashmiri Lal Chawla, with no extraordinary intelligence, eloquence or talent to speak of, rose to the senior position that he did. 
His long banking hours gave Kashmiri Lal little opportunity to make friends. His wife Manpreet remained his only friend, it was with her that he shared these tales of his journey with the Bank of Polampur. 
Most bankers, even those with thirty to forty years of service, have little knowledge of the actual state of affairs in their Banks, secrets that are kept well-hidden from the public eye and which Kashmiri Lal divulges here. Amongst such revelations are those relating to bank credit to several famous and much-envied figures – such as airlines owners who get themselves photographed ever so often with a dozen odd semi-clad beauties, owners of massive power plants and steel industries, manufacturers of popular brands of television sets and refrigerators that are to be found in every other home, promoters of oil companies etc. The general public is only now being let on, inadvertently, to a well concealed fact – that these well-known and apparently filthy rich personalities do not repay even the interest, leave alone the capital of their borrowings from banks. 
Another well-kept secret, which intrigued Kashmiri Lal and he sought answers to, is the basis on which these huge loans were disbursed by the Bank of Polampur. How did a manufacturer of capsule shells (which sell at 10-20 paise apiece) manage to raise 7000 crores? How was a steel plant with annual sales of 10000 crores approved a credit of 35000 crores, or a promoter working from a hundred square feet office lent 700 crores and a semi-literate rice trader sanctioned a loan to found a university? How did a pharmaceutical company which was earning huge profits manage to show massive losses in its books and get away with several hundred crores of public money? Kashmiri saw several such borrowers cock a snook at the banking system, declaring their inability to repay capital or interest because of enormous losses in their books, while continuing to live life king-size. Our narrator Kashmiri Lal attempts to shed light on these issues; he presents the facts as he saw them, it is up to the readers to draw their own conclusions.

Kashmiri Lal reminds us that in effect, it is ordinary people like you and me who end up repaying the capital borrowings and interest unpaid by these defaulters, by having to pay higher rates of interest on our housing, vehicle and education loans. It is we who pay income tax, GST and other taxes, not only towards development of infrastructure such as roads and power, but also to sustain amongst others, middle-aged `revolutionaries’ studying at the Jawaharlal Nehru University, our public representatives and even criminals lodged in our jails. Ultimately, it is you and I who bear the tax burden of maintaining sub-standard government schools, even if your children are not educated there, and government hospitals, though you would think twice of getting yourself (and even your pets) treated there. So it is with public sector banks, which are using our deposits to finance these swindlers.

The banking system, especially public sector banks claim that they make losses on advances to the agricultural sector, small scale industries and under self-employment schemes, because the percentage of bad debts is very high in these sectors. Whereas, the sad truth is that several crore farmers could be benefited from the loan unpaid by a single big borrower industrialist. A defaulting small borrower or farmer is hounded (sometimes to death) even at home, by repeated visits from petty bank officials. On the other hand, even the Managing Director (let alone the Branch Manager) of the lending Bank may be unable to manage an appointment to meet a large borrower-defaulter face to face!

In our country, there are a few fool proof ways to rise meteorically and attain multi-millionaire status.

·         Nepotism and favouritism in allotment of natural resources, mines etc.

·         Conversion of agricultural land for residential and commercial purposes

·         Non-payment of government taxes

·         Government contracts against bribes and supply of sub-standard contractual goods and services

·         Kickbacks to government officials and politicians

·         Capitation fees for school and college admissions

An analysis by Kashmiri Lal reveals the easiest, totally stress free and therefore the most rapidly growing method of becoming an  instant billionaire, with a high sounding designation such as  a ‘Chairman’ , Managing Director’  or ‘Chief Executive Officer’ . All you need to do is borrow an obscenely huge amount of money from a bank and wilfully default on its repayment. The common man has just a faint inkling of how this is done; Kashmiri Lal touches upon these previously well-kept secrets of the banking system.

After reading Kashmiri Lal’s experiences of his banking days, you may well ask if there was nothing right with the Bank of Polampur.  Were rules and regulations never followed in the bank? I happened to ask the same question of Kashmiri Lal,

“It does not make news when a dog bites someone”, he replied. “Only if man bites dog is it a newsworthy item! If you are interested in the everyday workings of the Bank of Polampur, I suggest you read the press announcements and annual reports on their website!”

You are also bound to wonder how it is that the Bank of Polampur has not shut down as yet, despite a world of scams and bad debts.  According to Kashmiri Lal, the bank works on the principle that keeps alive chit fund companies. As long as investors’ and depositors’ monies remain invested in the Bank, it will continue to draw still more investments and deposits. Then, there is the net difference in lending and deposit rates of banks; banks pay no interest on current deposits, only 3-4 percent on savings accounts and 6-7 percent on fixed deposits, while charging 9-14 percent on their advances. Besides, banks also have income from non-lending activities, such as locker rents, and service fee on issuance of guarantees, and insurance and mutual fund investment for other companies. Bank of Polampur also makes `appropriate’ entries in its balance sheet to `boost’ up its income.

While Kashmiri Lal’s stories may draw a smile or even a chuckle from you, the aim is not to provide for your amusement. This is intended as a diagnostic report for the banking industry.  If the patient can be motivated to understand the disease and start the necessary treatment, Kashmiri Lal’s labour in having his experiences written down shall not go in vain.

It is suggested that you sit down to read this after refreshing yourself with a cup of tea or water, or perhaps a visit to the toilet, for you may not feel like getting up while in the midst of the story. Do feel free to share your reaction with me after finishing this book.

I pray that, unlike the fictitious Bank of Polampur, you have a bright future ahead of you.

 

Ved Mathur

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