The Incredible Banker (3 page)

D
EEPAK spent the first few days reading the group audit and the RBI audit reports. They were quite scathing. It took him some time to get his act together as it had been a while since he had worked in lending business. But the basics don't change over time; it was not too difficult for him to come up the curve. Within a week's time he had identified the core issue. He knew where the problem was. Sanjit was right. It was clearly one of will, of the desire to change in a few people in leadership positions. While the people down the heirarchy were reasonably capable, in the absence of proper guidance and leadership they had drifted.

In the second week, he prepared a detailed action plan for everything that needed to be done. It took him three days to work out a comprehensive makeover strategy. Soon he shot off a mail to Sanjit.

Dear Sanjit,

Please find enclosed a checklist of activities which I have prepared after going through all the audit comments. If we are able to implement the proposed steps over the next sixty to ninety days, we should be able to come clean on any audit that is conducted by our internal auditors or statutory authorities.

To implement this checklist I will need some resources to work with me. To start with, I would like to request you to allow me to hire four people. I will be requiring these four people to assist me in executing the action plan and meeting the stringent deadlines.

As the current crop of people in credit team is aligned to a particular way of functioning, I would not like to move any of them to these roles. I seek your approval to hire these resources from the market, or from other units of the bank.

I look forward to your thoughts on the activity list and also your approval on the headcount.

Regards,

Deepak

Within five minutes he got Sanjit's reply.

Dear Deepak,

I am extremely happy with the progress you have shown. You have made a huge difference to our credit controls team. Well done! Please treat the headcount as approved.

Regards,

Sanjit

The mail was marked to the entire top management of GB2. Deepak's chest swelled by a few inches with pride.

Over the next sixty days Deepak's importance grew manifold within the credit department. Riding high on the sponsorship of the Deputy CEO, he began to be abrasive with people. Given the background to his entry into the credit team, no one took him head on. Even the incumbent head of credit, Bhisham Sen, did not dare to lock horns with him.

Deepak was a one-man army. He was there with an agenda. With a problem to fix. And his only trip in life, for the time being, was to get the bank a satisfactory audit next time around. However, the line between arrogance and firm determination is a blurred one. And when Deepak crossed that thin line, no one knew. He was becoming a pain to deal with. This became apparent in the last week of July 2007.

It was month-end time. Month-ends in any sales organisation are very hectic and action-packed. Apart from the occasional screaming and shouting by the supervisors at sales guys who hadn't met their monthly targets the atmosphere in the office was festive.

Every sales business in the country including the financial services business experiences a sudden spurt in sales towards the end of the month. All of a sudden deals start getting closed, obstacles to the closures are removed, people start working more efficiently, customers come out of nowhere and deals start getting juicier for the customers. And this sudden positivity defies all logic.

This was true even for the loan business, especially the home loan business. In almost all the banks about 35-40 per cent of the home loans for the month were booked in the last two-three days of the month. Surprisingly, there were no records to suggest that 35-40 per cent of property deals were closed in the last week of the month. Then why did home loan sales only shoot up towards the end of the month? Even the smartest of managers couldn't crack this mystery. Various ways to stagger the loan disbursal evenly over the month, including incentivising the sales staff, had failed miserably.

Though such a month-end upsurge was welcome at any time of the year, it didn't come without its bag of problems. Month-end sales put tremendous pressure on the entire system, which at times could lead to a breakdown. People were required to work late into the night, even on holidays, which frustrated them. The entire support system would be on its toes to handle the level of throughput and sometimes that created chaos and confusion.

Karan Punjabi, GB2's Regional Head of Mortgage in western India, was marshalling his team that month-end. It was already the twenty-sixth of July. Five days to go for the month to end and there was a weekend in between. Karan was far short of meeting his monthly target of ninety-six crore - he was off target by about forty-two crore. Things needed a desperate push in the last few days so that he could touch the magical number of ninety-six crores. In fact he was aiming for hundred crore worth of loan disbursal from Mumbai. A very impressive figure to quote in front of the entire management team.

It was late evening and Karan was having a cup of coffee with his sales guys and a few credit guys. He was a great motivator and a brilliant team player who was rated very highly by the senior management at GB2. Deepak passed by. He looked at Karan and stopped to ask, 'What are you folks doing here?'

'Month-end na. So we are getting the mortgage loans booked and disbursed,' one of the sales managers working under Karan volunteered.

'Why don't you guys work during regular days in a month? You won't need to work so hard and so late on a month-end!' He couldn't help being sarcastic even when he was in no way involved.

'You have seen it yourself when you were on the other side in branch banking, Deepak. What's new?' said Karan and added after a pause, 'as if you don't know how a sales team works.'

'Oh, yes, yes, I know. But that does not necessarily mean that I subscribe to everything that goes on.' He was nasty and aggressive.

'Hmm...that's your opinion. And I guess an opinion is like an asshole. Everyone has one. You have the right to yours, my friend!' Karan was not the one to keep quiet. Deepak's caustic comments were the last thing he could tolerate as he was already annoyed due to his team's average performance that month. 'Come on, guys. Let's not waste our time here,' he said as he walked out, leading his bunch of sales guys.

As expected, Deepak, too, was not thrilled with the way the tables were turned. He was only trying for a smart repartee which backfired. The way he was insulted in front of the sales guys left him fuming. How could Karan do this? His dislike for Karan was legendary anyway.

There was a history to the Karan-Deepak story. Both of them were branch managers at one point in time in GB2 in Mumbai. Extremely competitive, smart and well-regarded. It was difficult to choose the better of the two.

Competition often breeds dislike and that's what happened to the two of them. Over time, they reached a stage where they just couldn't stand each other. What made matters worse was that Karan scored over Deepak in the next promotion as he was seen as more of a people's man and his ability to lead teams was apparently more evolved than Deepak's. This peeved Deepak and he saw it as a loss of face.

Since then Deepak had always remained one level below Karan in the organisational hierarchy, even though he thought of himself to be more capable and efficient than Karan. That evening's tiff was yet another chapter added to their hostile history. Karan's smart comeback had left him angry and insulted. He had to do something to get back at Karan.

That day Karan was able to disburse loans worth only four crore. He had four more days that month to disburse loans worth thirty-eight crore left to meet the monthly target of ninety-six crore. He sat with his sales team that night to take stock and was reasonably confident that with the number of deals they had in the pipeline, he would be able to meet the benchmark easily. So, he didn't need to lose sleep. He went back home confident he would be able to beat the monthly target.

When he reached office the next morning, he was surprised to see some activity on the credit floor, very unlikely so early in the morning. The place was swarming with people. 'What were so many people doing there?' he thought. On a normal day there would be six or at the most seven underwriters there. (Underwriters are people who look at a loan application and approve or decline the loan.) That day they were double strength than their usual number. And none of the sales guys were around. He had in fact received quite a few calls from his sales team in the morning, which he did not responded to because he was driving to work.

He walked in that direction to figure out what was going on. And then he saw
him.
As he walked towards the credit team a head rose from the cubicle.

'Good that you came in. In fact I was going to call you.'

'And why would that be?' Karan was already beginning to get irritated.

'Karan, I do not want any sales guys on this floor today. I don't want them to be talking to any of the credit underwriters. We are doing an audit and we want to make sure everything is in order and not influenced by sales.'

'That's fine, Deepak, but don't you think your timing is wrong? We have four more days for the month to close and we cannot afford a disruption like this. And what is the agenda? What is the purpose of this audit? This was not on the plan. Has this been signed off by anyone?'

'It's a surprise audit. We planned it last night. We were a trifle worried about the quality of work on a month-end. If the entire system is so stretched that it is on the verge of collapse, how do you expect things to be normal? How do you expect an underwriter who normally works ten hours a day, to work for sixteen hours on a month-end and deliver the goods with the same efficiency? How can they look at loan applications with the same level of diligence if they are so overworked? How do you expect a valuer who values five properties a day to go out and value twelve of them in a day and still give you the same output? So, we want to make sure that in your quest for numbers the bank's interests are not compromised. Every loan that you book these days is in the range of 60-75 lakh. One loan going bad can wipe out the benefits that all month-end loans give you cumulatively.'

Deepak had a point. But this was not the right time to play it across. Karan figured out that it was futile going after Deepak. He knew that he had to raise this issue somewhere else. He stormed into the room of the credit head, Bhisham Sen.

'Bhisham, this is not done.'

'What, my friend?'

'Deepak can't be auditing us on a month-end. I am quite happy facing the music if there are any mistakes but I don't want him jeopardising my business at this crucial time.'

'What are you talking about, Karan? What has Deepak done?'

It was clear then. Bhisham was clueless about what Deepak was up to. Karan explained to Bhisham in painful detail what transpired between Deepak and him the previous evening and what Deepak was doing that morning to even the score.

Bhisham heard Karan out and grasped the issue. He instructed Deepak to back off and told him that audit could be done after the month was over. Deepak was not happy, but Bhisham was his boss and he could not have questioned his orders.

He immediately withdrew his team from the audit and moved them out. However, the sixty minutes that he spent with the underwriters wasted their precious time and impacted them. They suddenly became extremely worried about the consequences of any mistake that they may make. They were worried that a witch-hunt would begin in case of a goof-up, which would make life miserable for them. They became overcautious.

All the underwriters started spending unduly long time on the loan applications. If they spent twenty minutes in the normal course on a loan application, they started taking forty, which impacted their output. Applications could not be cleared at the speed required to meet the month-end targets and started piling up at the tables of credit underwriters for a decision.

Karan was getting frustrated with this slowness but he could not push the underwriters beyond a point. They did not report to him directly. And if he did push them he could have been accused of manipulating credit for the sake of business, which was not viewed well in GB2.

Karan and his team could only disburse eighteen crore in the last four days and thus fell short of his monthly target by twenty crore. For the first time in his career at GB2, Karan had missed his target by that huge a margin. What also hurt him was that the morale of his sales team was affected. Nothing really motivates the sales team more than achieving targets. Money and incentives are secondary. The adrenalin which gushes when you see your targets being overrun has to be felt to be believed. The entire team felt let down. They had in the pipeline cases to get to the target, but because of the fear which had set into the minds of credit underwriters due to Deepak's action, they were not able to close the pipeline deals.

In lending, it is said that credit is all about mindset. And the credit team in GB2 was just not in the right state of mind to deal with pressure, and Deepak obviously deserved the
credit
for that. The damage had been done.

When Karan raised the issue with his boss, he did not get much support. He was bluntly told that he should manage stakeholders better and should push things which were in his control rather than make excuses post a poor month. He got the message. The entire episode was not seen as a deliberate screw-up by Deepak but as a poor excuse by Karan for not having met the desired numbers.