'There seems to be a mistake, Shankar. This is not complete.'
'I am so sorry, Mr Jain. Let me check and get back to you in a minute.' Shankar went to the customer service representative and came back in three minutes.
'Mr Jain, this indeed is the correct status.'
On the deposit status sheet, Mr Arun Jain's deposit showed Rs 4.2 crores whereas when he had left for America he had Rs 9.6 crores in his account. He was shocked and speechless. He picked up a glass of water and gulped it down.
He opened his briefcase and pulled out an old statement that had been given to him before he left for America. He passed it on to Shankar. That showed Rs 9.6 crores.
Shankar went back again and this time he had another sheet of paper with him.
'Got it, sir. The balance 5.4 crores are invested in mutual funds through us.'
Jain gave Shankar a blank look.
'2.4 crores in HDFC top 200 and the balance in Franklin Index-linked funds.'
'Are you kidding? What is wrong with you, Shankar?' Arun Jain was screaming at the top of his voice. The banking hall suddenly fell silent.
'In my entire life, I have not touched any shares or share-related instrument, and you are telling me that I have invested over five crores in mutual funds. Are you out of your fucking mind?'
'Mr Jain, I am sure there is some confusion on this one. We do not invest any of our customer's money into mutual funds without their mandate. I am sure we will have an instruction letter for this investment. Let me try and pull that out for you.'
Mr Jain was already shivering with rage. He paced up and down Shankar's room, waiting for the so-called document to arrive.
'Old man is out of his mind. Pull out the letter he gave us,' Shankar muttered to the customer service officer responsible for filing all such documents. 'Thank god, he is Club Class.' Normally, NYB would have sent the customer instruction letter to their centralised operations unit in Chennai, from which retrieval would have taken at least a week. For the Club Class customers, NYB had the practice of retaining a copy of the customer instruction at the branch for six months. Hence it was not too difficult to retrieve a copy of the same.
When Shankar produced the same to Mr Jain, the later was left speechless. He didn't know what hit him. Right in front of him was a paper which had his signature, but one he had never signed.
He looked at Shankar and, his voice belying the storm within, said, 'Shankar, I haven't signed this. On the day this transaction was effected, I was in America. I have never invested in any mutual funds ever.'
'Mr Jain, did you ever call and give instructions to anyone in this branch, Nidhi maybe?'
'Son, I may be seventy years old, but my memory is still going strong. I haven't asked for this transfer. Now will you figure this out for me or should I call Mr Sundeep Srivastava?'
Shankar was a worried man. How could something like this happen? 'Sir, we can withdraw the amount and credit your account back immediately. I will sort this out.'
'You better do that young man, else I will have to do whatever I can to get my money back, and that may not be something you will like.'
Shankar returned in a few minutes. The look on his face told Jain that all was not well.
'Now what?'
'Mr Jain, the 5.4 crores that was invested in your name is now worth only 3.9 crores. The stock market has fallen by over thirty percent since we invested. This has impacted the Net Asset Value of the mutual funds as well.'
'Thank you.' Jain got up from his seat. 'My lawyers will now talk to you. I will make you guys pay every pie of it.' And he stomped out of Shankar's room.
The moment he left his room, Shankar picked up his phone and dialled Anindyo. He couldn't get through to him as he was in Rio. The next call was to Sundeep.
Sundeep initially didn't believe what he heard. He thought that the customer was trying to create a scene since he had lost a lot of money in mutual funds. When Shankar explained to him, he was concerned. He was too smart not to have understood what would have happened.
They tried calling the hotel in Hawaii where Nidhi was staying. She had just stepped out to the beach. They left a message for her. In an hour she called back.
'Sundeep, were you trying to reach me?'
'Yes, Nidhi. What's the story on Arun Jain?'
'What about him, Sundeep?'
'He claims that he never gave instructions to transfer money to mutual funds from his deposit account.'
'Oh that. Sundeep, this is the same guy I spoke to you about, on the last day of the contest. You had asked me to go ahead. Don't worry, Sundeep. I will come and manage it.'
'Bitch, you stay in Hawaii and do not come back, because if I see you, I will slaughter you,' said Sundeep. He was furious. He knew that she had forged the signatures of Arun Jain and transferred his money to mutual funds. He knew that the moment Shankar told him that the amount was transferred on the last day of the 'Hawa se Hawaii' contest and that the RM was Nidhi. She had taken his approval on this, but he didn't realise that this would blow in his face.
She had bet on a booming stock market, but the market let her down. He decided to terminate her. He had no option. If he didn't, it would come back to hurt him. It was sad because she was a great fuck.
A termination letter was faxed to Hawaii, where Nidhi found it on her table when she returned from a swim. She knew it had to happen. Irrespective of that, she decided to go ahead with her trip to Rio. Any bank would give her a job on her return. Anindyo was a big guy. It was more important to keep him happy. And, who knows, maybe one day Sundeep would come back to her too.
The bank decided to pay back Arun Jain and take a hit of over two crores. Shankar communicated the same to him. It had taken the bank two days to make up their mind, and Arun Jain had already complained to the police. He had pressed forgery and cheating charges against the bank. The media too had caught on.
The morning newspapers the next day carried banner headlines, 'NYB wealth managers caught in a major fraud: Rampant forgery of customer's signatures.' Trouble was brewing for NYB. Once this headline hit the newspapers, a number of customers came back to the bank to check on their deposits and found that their funds also had been invested and lost in mutual funds. A problem that began with Arun Jain was snowballing into a major controversy. In a matter of three days, the bank had logged in 359 cases of forged signatures—all from wealthy customers. It was becoming a big credibility issue for the bank.
What had gone wrong? The wealth managers had bet on a bullish stock market and assumed that they would be able to make their customers happy by transferring some money from their accounts to mutual funds. The customer's wealth would go up and they would make significant incentives in the bargain. Typically a bank is paid two percent of the amount invested through them in equity mutual funds, and often upto twenty percent of that amount makes its way back to the wealth managers as incentives.
In the case of Nidhi, the Rs 5.4 crores that she had clandestinely moved to mutual funds gave NYB Rs 10.8 lakhs in revenue. The incentive Nidhi made on this would have been Rs 2.2 lakhs—not a small sum of money by any standard, certainly not for a Wealth Manager. People were bound to fall prey to temptations of that order. But, in the case of NYB, it was not the lure of money alone that was responsible for this. The pressure, which Sundeep put on the system, was enormous. It was assumed that only the results mattered, not the manner in which they were achieved. This was partly responsible for the systemic collapse.
The bank was expected to build in processes to ensure compliance and put controls in place. Sundeep pushed all his people for numbers, but didn't put in adequate controls.
Sundeep moved fast, and created a task force and a core team to deal with this debacle. But this one refused to die down. They tried to hush it up the same way they had killed the insurance cross-sell issue, but were unsuccessful. When Global HQ got to know of this, they were very embarrassed. They wanted to know who was the person responsible for this entire episode. With 359 rep
orted cases across the country, the only person they could point a finger at was Sundeep. He had fostered a culture built on low morals and low integrity, and now it had come back to hurt him.
The media glare brought with it a host of new problems for Sundeep. The whole issue blew up into an ideological debate on national television. It snowballed into a discussion on whether the controls in the financial system were adequate to ensure that the people's trust was in safe hands. Talk show after talk show debated for days on whether the banks were a safe place to invest any longer. NYB was being compared to the plunderers from the West who had looted India in the past. A number of caricatures of Sundeep and Kailash with moneybags and the NYB logo in the background dominated the print media.
The media seemed to suggest that the banking regulators had no means of protecting the consumer's interest in such cases. They also raised fingers at the regulators for letting the foreign banks off the hook so easily. The banking regulators were obviously peeved.
They came sniffing with a vengeance, right to the doorsteps of NYB. They went on record stating that they will not allow NYB or any other bank found guilty of any malpractices to open new branches and ATMs. They had to be seen to be taking action against the guilty. NYB at that time had licenses to open four new branches. All of them were withdrawn without an explanation.
A team of Reserve Bank of India (RBI) auditors landed at NYB for a surprise audit. During the audit, a number of other issues cropped up. NYB was found to be flouting the Know Your Customer norms, which had been mandated by RBI. The inspection found a number of loopholes in the way NYB was being run. They were extremely unhappy and said so in no uncertain terms.
If NYB didn't face a run on the bank, it was only because of its reputation as one of the largest and best banks in the world. But Sundeep was in trouble.
All this happened in a matter of one week.
69
The situation was becoming too hot to handle. Kailash was under tremendous pressure to act. He called Sundeep into his room. Kailash had hired Sundeep into this role and so he wanted to protect him.
'Where the fuck is that bitch Nidhi?' Kailash was furious. Sundeep was not listening. He was looking at the crystal vase in the corner of the room. Natasha had bought it when she was the secretary to Aditya Rao.
'Sundeep, where the fuck is Nidhi?'
'Kailash, you are aware that we sacked her four days ago. We haven't heard from her yet, but the hotel has confirmed that they have handed over the fax of the termination letter to her.'
'The matter has reached such a state that now we have to demonstrate to the media that we have taken some action. If we don't, then we will be taken to the cleaners. It will be disastrous for our franchise. It will be in your best interest if we quickly find something for you to move out to.'
Sundeep didn't like this. Kailash was politely asking him to fuck off from there. But he had anticipated this. He was a smart guy. 'Kailash, Martin Sanders is looking for a Head of Retail Bank for UK. I heard that last night. I was myself going to talk to you. Do you think you can get me that job?' It was actually Naresh who had told him about that opening in the UK. Thanks to Naresh, Sundeep was trying to turn adversity into opportunity.
'I don't promise, but I will try. You must be prepared to move at a short notice, Sundeep.'
'Maybe we should not have come back to India,' Natasha blurted out at the dinner table. Their kids had just settled down in Mumbai and their school.
'It was a bad idea, I agree,' said Sundeep. 'What have I not done for this organisation? I gave it my best, I pushed everyone and got revenues doubled in eighteen months, but at the first sign of a problem, they drop me like a hot potato.' Sundeep was not too happy with the way Kailash had spoken to him that morning. But he had only himself to blame. He was the one who drove people madly and looked the other side when they made mistakes. He realised that he was lucky to have survived this.
He washed his hands and walked into his study. His cell phone was blinking. He had put it on silent mode. He picked it up. Karuna was trying to reach him. He disconnected the phone. He was in a very foul mood. He did not want to speak to anyone. The phone blinked again. He looked at it and again disconnected Karuna's call. He switched off his phone and threw it on the table. He had some important work to do.
He picked up the cordless and called Naresh. He was the one who could do something for him.
70
After Sundeep had left the room, Kailash called his secretary, 'Aparna, can you get me Chetan urgently.' The phone in his room beeped. 'Kailash, Chetan Bindra's secretary on the line.'
'Good morning, Margaret from Chetan Bindra's office,' came an anglicised Indian voice from the other end of the line.
'Margaret, can I speak to Chetan Bindra?' Chetan was the current Head of Retail Bank for NYB for the international markets—that is, all countries except the US.
'Hey Kailash. How are you, old man?' It was Chetan Bindra, in his usual high-energy tone. Chetan had joined the group twelve years ago as the marketing head for India, and now he was the king of retail bank across the globe for NYB. His rise had been spectacular.
'Good evening... I'm sorry, good morning Chetan,' said a nervous Kailash, mixing up the time zones.
'I just had a word with Sundeep and have told him that he must bail out and take the first job we are able to get him overseas. This will divert a fair bit of attention from the core issue.'
'I feel sorry for him. He is a bit like me in his approach. I see myself in Sundeep. I like him,' said Chetan, 'It's a bit unfortunate that he got caught in this controversy.'
'He is a great talent and a good leader, but he lacks controls, Chetan. I have counselled him on a number of occasions to be careful and discreet.'
'Good.'
'Chetan, the purpose of my call was to discuss about who we should bring to replace Sundeep.'
'What's the doubt? You clearly need to bring in a mature guy like Swami.'
'But Chetan, he is not a great leader. He doesn't know how to keep his people happy. He cannot run at the same pace.'
'Kailash, you have seen the problems you have to deal with if you run with a guy like Sundeep. I would rather take a balanced approach rather than a cowboy approach. This time we were fortunate to have escaped. Our stock price didn't get impacted. But we might not be so lucky next time around. Our stocks will take a pounding and the loss in market capitalisation will be far more than the miniscule gains we will make in India. Not worth the risk, my friend. Get Swami. He has run operations in the BPO. Is process oriented. Has migrated process from overseas to the BPO. Knows how we as a bank operate in other countries and is very high on integrity. And most importantly, he was the one who launched retail bank in India.'
'OK Chetan. I will communicate accordingly. But what about Sundeep. Where will he go? He was telling me about a position in UK with Martin Sanders, as Head of Retail for UK.'
'Oh, of course. How could I miss it? I am okay giving that role to Sundeep. It is a big role. The business in UK has stagnated for the last three years. Sundeep will be able to kick start it. That business has the potential to become one of our largest businesses. I will speak to Martin. You go ahead and commit the role to Sundeep.'
'Thanks, Chetan.'
'Aparna,' screamed Kailash. She came in running. 'Can you get me Swami?'
'Sure, Kailash.'
'No. Don't connect him to me. Ask him to see me tomorrow morning at nine. I want to meet him in person.'
71
Between that night and the next morning, two big deals were closed. Sundeep was to move to UK as Head of Retail Banking and Swaminathan was to become the next Head of Retail Bank for India.
Despite the screw up, Sundeep was saved the ignominy of an ouster from the bank.
When Swami came out of Kailash's room, he called his mother. 'Amma, I have made your dream come true. I have today become the Head of Retail Bank for one of the biggest banks in the world.' His mother was in tears. She
decided to go to the temple of the family deity and do an Abhishekam, a traditional bath given to the lord by the devotees.
When Kalpana heard about this, she didn't know how to react. She knew how bad Swami had felt when he had to report to Sundeep. She also knew how Swami had felt like quitting when he was shunted out to BOCA. She had been his source of support and motivation. She just hugged him and wept. She was very happy for him. Life had come a full circle for him.
Sundeep had to move to UK in a few days' time and so he could not give a complete handover to Swami. He was under such a pressure to move quickly that his team could not even give him a farewell.
The first thing Swami did on taking over was to make sure that the business numbers didn't go down. Recovering from a downward slide was more difficult than recovering from a growth trajectory.
He hit the road and went to every branch and reassured every employee that all was well. He reiterated the importance of training, compliance, and doing business the right way. There was a stretch when he visited eleven cities in six days and held town-halls in every one of them. All employees of the bank attended these town-halls. The passion with which he delivered the speeches in these town-halls was very unlike Swami.
He took a very smart step. He roped in Aditya as a consultant for the bank. Aditya too was glad to be of help. He wanted to set everything right in a business they had started from the scratch.
Swami realised that Sundeep was only a people's guy. He had not gone into the nitty-gritty of the entire business. He now started asking tough questions from his team. Every cost was questioned. Non-compliance became a bad word. People were running scared of doing anything unethical. Swami would hound them.
The rampant frauds in Ram Naresh's unit were dealt with very strongly. With one crack of the whip. Swami made Akshay Bhalla fire a team of over 125 people from Naresh's team, as they were suspected of rigging personal loan files to make them fit for approval.
Naresh called Kailash to crib about Swami, but Kailash couldn't do anything about it. He tried talking to Swami, but Swami was like a man possessed. Kailash decided to lay off. On matters of integrity it was always safe to side with the person who has an honest reputation.
If God Was A Banker Page 18