Complexities in Risk Management

Complexities rise in Risk Management


B. Yerram Raju*

The latest Financial Stability Report from the RBI confirms that the risks to financial stability have worsened although financial institutions are largely resilient to credit, market and liquidity risks. The 82nd Annual Report of BIS expressed more concerns: ‘Five years on from the outbreak of the financial crisis, and the global economy is still unbalanced, seemingly becoming more so as interacting weaknesses continue to amplify each other. The goals of balanced growth, balanced economic policies and a safe financial system still elude us. The Report points out that the financial sector, governments, and households and firms need to repair their balance sheets: "the financial sector needs to recognise losses and recapitalise; governments must put fiscal trajectories on a sustainable path; and households and firms need to deleverage. As things stand, each sector's burdens ... are worsening the position of the other two." It is the operational risks that continue to rise. Who would ever have imagined that Barclays or Stanchart would indulge in manipulating the LIBOR? Technology, the facilitator for speed and accuracy, started turning riskier than ever.

Markets rejoiced with the huge bailout packages for the Euro Zone. The earlier US Fed package and this package clearly throw up moral hazard to the front as the cascading effects on the rest of the global financial system seem to worsen. All along, risk management practices in emerging economies have been driven by regulation and intense supervision. The other side of risk, namely, the reward is forgotten. When does the coin turn to the other side and what the Banks need to consider and remedy? In the Indian context, these are briefly examined.

The conservative regulator, distancing from capital account convertibility, and non-introduction of derivatives saved the Indian financial system and economy from the contagion effect of global recession in 2008. But we could not stay far from it for long and throughout 2011and till now in 2012, the policy makers blame the global effects of Euro fall and job losses of US in the wake of continuing recession-effect for the ills of the Indian economy. "The financial sector is putting pressure on the government," the BIS Report adds. "Governments, with their deteriorating creditworthiness and need for fiscal consolidation, are hurting the ability of the other sectors to right themselves. And as households and firms work to reduce their debt levels, they hamper the recovery of governments and banks. All of these linkages are creating a variety of vicious cycles." There has been compression of credit in the first quarter despite rate corrections by the RBI.

A couple of decades back, when the reforms hit the financial sector, the NPAs were blamed on the government-sponsored programmes or directed credit portfolio. The fears of NPA have only multiplied ever since although banks have learnt the art of greening their balance sheets and giving net NPA position in the range of 3 to 0. Chairman of the biggest Bank, SBI, recently confirmed that 20 percent of the restructured debt would land in the NPA bracket . It is shocking to realize that it is not agriculture or SME sectors that take the giant share of this but the corporate credit. The quality of credit appraisals and due diligence is resting on technology instead of careful enquiry and analysis. Institutions have migrated to arm-chair lending. Playing to the gallery has become the name of the game. Due diligence of firms and their directors, expectations of financial flows are turning out faulty with billions of rupees getting unearthed in frauds and collusive part of banks being questioned in the process. ATM frauds are on the rise. Manipulations are maneuvering the systems.

Operational Risks:

The ground level staff is more tech-savvy than domain-knowledge driven. Recruitment is on machine to man ratio. Manpower planning in Banks does not seem to provide for continuous off-the desk training. The digital and on-line training has become system driven. Opportunity cost of training having gone up, institutions fall short of training and education expenditure. Training costs are treated as operational expenses by banks. If there is change in the accounting practices and such expenditure is treated as Investment Cost in the balance sheet of banks and it is in fact so, there is prospect for this portfolio of banks taking a positive turn. People and process risks need immediate attention as attrition is posing a problem. The Risk Managers may have to evolve a model where a person with more than 5 years of experience were to join another organization, the company engaging such person should pay to the company a part of the development cost of this resource. This can be a complex model but need working out if attrition were to be prevented in the long run.

Basel III concerns:

In this backdrop, if we look at the capital requirements, one keeps wondering whether capital availability of huge size would cover all the risks that are surfacing. Banks must reduce the NPAs not only when they surface but by preventing them for occurrence. Once they surface, they should quickly act on converting them into cash by taking recourse to factoring – not so popular with banks till now- and sale of collateralized assets to asset reconstruction companies like the ARCIL. The Government is the biggest owner of the financial system and should provide capital only after it is convinced that the options at their disposal are fully exhausted. Budgetary provisions for capital replenishment would mean putting deeper holes in the tax-payers’ pockets. The other best way is, reducing the share of government in Public sector banks while retaining its say on the affairs of management and governance. In fact, Narasimham Committee suggested in its very first report that the government should gradually reduce its share in the PSBs. Instead, we saw its increasing participation and interference. May be that the present Finance Minister in PM would revisit the reform agenda. It is not the size of the Bank but the quality of service and proximity that become crucial to financial inclusion agenda and therefore, the small and big banks, the public and private sector need to co-exist. The holding company concept with all checks and balances may become relevant for getting critical mass in shape in the financial sector. The less-attended cooperative sector needs also dedicated support for a clean-up and reform process.

Feedback at yerramr@gmail.com

NPA Management

Banks require Rs.1,67000cr capital to meet the requirements of Basel III in the next two years while they have Rs.1.37000cr locked up in 67000 cases with the Debt Recovery Tribunals as at the end of March 2012. It would make lot of sense for the Finance Ministry to ensure expeditious treatment and recovery of the DRT cases by incurring the required cost instead of pumping in tax payers' hard earnings to refurbish the capital required.

The Sixty year-young Parliament

13th May 2012 was a day of resolve by the otherwise divisive Parliament to keep the Legislative Wings superior to the other two - Executive and Judiciary. It is Judiciary that saved the country from the slanderous behaviour of some of the elected legislators' and Parliamentarians' and even the Executives' misdemeanours. It is not the question of which arm of democracy is supreme so much as which arm is performing to the expectations of its people. Out of the nearly 40crore adults eligible to exercise the franchise, only twenty to thirty percent exercise the franchise. Out of them, many whose interest in future is limited - we find, the old disabled and those closer to their final destination also exercise the franchise. While this is the great virtue of Indian democracy, there is need for electoral reforms that would enable only those with untainted lives in whatever field they have been engaged in the past to contest elections without fear or fervour. It is the fond hope that those elected to sit in Parliament would be the beacon lights to the democracy by not absenting themselves even for a day of its working; by not claiming privileges for their own sake; by enacting laws that reform the nation socially and economically with provisions for speed of execution and with an annual regulatory review of such laws to ensure serving their intended purpose. Sixty years is the age of retirement in India for the present. Many individuals celebrate the Sixty as the marriage day recalling the happy years of married life. The Nation too celebrates - but there should be a resolve to work for the eradication of poverty and achieving growth across the length and breadth of the Nation evenly.  

The Parliament at Sixty.

The Parliament at Sixty has a tough agenda for future:

India is a miniature world. It has all the flora and fauna available in the rest of the globe. It has all types of soils – from the lateritic to alluvial to black cotton. It has all types of water – from saline to mineral and to plain. It has all types of weather. It has all types of minerals – some are highly inadequate while a few in abundance. It has a long coast line – extending from Bay of Bengal in the East to Arabic Sea in the west joining at the tip in Indian Ocean. Apart from this great geography, it has thousands of history. Yet it also suffered the longest history of servitude of colonialism. It has tolerance to all religions exercising free existence. It has perennial rivers and yet lots of villages without drinking water. It surpassed famines and yet farmers commit suicides under the burden of debt. It suffered from the worst of cyclones and tornados as also occasional visits of worst of droughts. It had the worst of earthquakes. It has world’s greatest Universities with many a village without a good primary school yet. It has the largest number of bank branches of various hues and sizes spread throughout the length and breadth of the country and carries still highest level of Financial Exclusion. It has a confluence of cultures of various dimensions and languages with thousands of dialects and variety of scripts. Its diversity is as much strength as weakness. The people of the land enjoy freedom of speech like nowhere else in the world. It has recently joined the league of the most powerful guild of nuclear nations.

Its Parliament is 60years young on this 13^th May and both the Houses stand in unison for once, to celebrate and recall the glorious years when its first Parliament had the highly educated and literate while the current Parliament has perhaps the World’s largest number of billionaires in a democracy in such a short time. It has the poorest of the poor and richest of the rich. Its economy started looking up from the middle of the first decade of the triennium, only to falter in the wake of series of scams and seriously suffer under its own weight of misbehavior and misdemeanor of the political and bureaucratic elite. Introspection truly is tough. There are States that take pride in the figures of poverty because of the faulty incentive system built into the federal fiscal dispensations. People have come to take shelter in being a part of the schedule of the Constitution. The land that treats woman as a deity cruelly treats her on the streets and gender discrimination and sufferance are common.

McKinsey Report in 1990s mentioned that India was losing 1.3 percent economic growth a year, if we consider the man-hours lost in land litigations. Doubts over ownership of land inhibit supply of capital, thus raising the cost of credit for agriculture. There is a consistent demand for lowest cost of credit for agriculture and this is met by huge interest subsidies and disinterested investments in the sector. There is a flight of capital from land and land is groaning under the weight of unproductive labour. India is a land of entrepreneurs. But enterprises retreat in the largest numbers.  Business climate index always suffers from serious dips. Targeting inclusive agenda is easier than reaching the goalposts. The path is rugged with self-imposed but obnoxious regulations that cry for reforms. The land of talkers should turn out ere long as land of doers and this becomes possible only with discipline and demonstrable stern action for the errand in the quickest possible time.

The 97 amendments of Indian Constitution in 60 years eloquently speak of the need for rewriting the Constitution with a brave new world of another 60 years ahead of the country to rebalance the economic and political forces. It longs for a sensible administrative code that could check corruption and bribery. There have been long hours of debate on the Lok Pal Bill but its passage adds significance at this moment of history. I am reminded of what Oliver Gold Smith said once: “Let not thy winged days be spent in vain; where gone, no gold can try them back again.”

 

AP Budget evokes mixed responses

AP State Budget 2012 evokes mixed response
The fourth largest State of the country, Andhra Pradesh has as many credits as discredits at the time of its Annual Budget 2012. It has a growth rate of 9.26% surpassing the National GDP 8.5% in the five-year period 20045-12. Over 40% of its geographical space is farm land and has 22% forest cover. 8744km river length and a coast line of 974sq.km offers scope for port development. It has tainted bureaucracy; Ministers and politicians deeply entrenched in corruption and controversies; though second in the country in mining, the growth of the sector is marred by unholy exploitation. The State saw the farmers queuing up for fertilizers; burning the crops like cotton and mirchi; throwing of onions in the streets for want of better price; crop holiday etc. Several of the recommendations of Jayati Ghosh Committee in the wake of farmer suicides and Mohan Kanda Committee Report in the wake of crop holiday have not seen light of the day. Liquor mafia in the State is under seize of the ACB and the estimated amount is Rs.5000cr and some informed sources place it ten times more.
The Rs.1.45lakhcrore budget of Andhra Pradesh Finance Minister in this backdrop is a hopeful estimate against the poor performance in 2011-12 both on tax revenue and capital receipts. Non-plan expenditure indicates a rise of around 15percent.
Sectorwise Allocation in regard to Economic Services (%) in Budget 2012-13
Sector RE.2012 BE 2012-13
Economic Sectors 36.46 37.99
Agriculture & Allied activities 3.56 4.04
Rural Development 5.93 6.48
Irrigation & Flood control 16.09 16.56
Energy 4.05 4.07
Industry & Minerals 0.70 0.70
Transport 3.05 3.04
Science, Technology & Environment 0.01 0.01
General Economic Services 3.08 3.09
Social Services 22.87 31.74
General Services 40.67 30.28

The tax buoyancy is seen in the expectation of nearly 20percent rise to Rs.66021crores in 2012. The growth euphoria of 9.26percent compared to the National GDP growth rate of 6.88% whittles down when one sees the number of farmers’ suicides and the lowest human development index ranking of the State (10th). Agriculture budget in a predominant agriculture State is a meager Rs. 3175crores (2.2% of the total budget or 3% of the revenue budget). There is no announcement of Market price stabilization fund the farmers have been seeking for the last five years. Regarding drought relief, except looking to central grant, nothing more could be seen.
The best part of the Budget is higher allocation to Education that touched 18% of the Revenue budget, the highest in the recent years. Allocation to Health dropped by a notch over the previous year from 4.16% to 4.04%. Allocation of just Rs.633crores in the backdrop of CII-organized Global conclave that promised investments of Rs.6.48lakhcrores would make the investors turn a nelson’s eye on the State.
Power sector is reeling under weekly power-off for the industry sector; farmers cry foul over the free power/seven hours a day; and severe voltage fluctuations speak of the quality of power. Investments seem trifle in this scenario for this sector too. Budget has long verbose where the allocations are least; the irrigation sector cleverly sticks to whatever was spent last time: it is actually Rs.8459crores against the allocation of Rs.15000croress. This helps in Fiscal Responsibility Budget Management of the State even in the year 2012 as releases are hinted only at the levels attained in 2011-12.
If the Social sector expenditure got a higher share it is only to be expected in the wake of by-elections in Telangana region and the impending General Elections a year after. The unsustaining sops would certainly cast a shadow on the growth prospects of the State. The Chief Minister’s keenness on sports led the Finance Minister to announce well-equipped sports stadia in each District. Legislature Constituency Fund of Rs.382crores goes for non-monitored investments/expenditure. The tiresome speech of the Finance Minister faces trying times in reaching the expected outcome.

Budget Blues

‘BEWARE OF THE IDES OF MARCH’
B. YERRAM RAJU
Economic Survey prior to Union budget 2012-13 is slated for 15th March and the Finance Minister started losing sleep in the wake of huge subsidies required for food safety, agriculture, irrigation, and investments. Strangely, he did not batter his eye-lid even once while increasing the MPs’ salaries and the annual largesse from Rs.1crore to 2crore per annum that triggered of chain reaction in States and even Municipal Corporations. The Corporators of Hyderabad were allowed a similar largesse at its Februrary 9th meeting. This largesse has no accountability and responsibility attached to them. The fiscal deficit takes a dip – both States and Centre put together by avoidable percent. FRBM has already reached beyond the promised level of 4.5% this year, with revenues dipping from both direct and indirect taxes in the wake of anticipated modest growth of around 6.9% (this also is doubtful) and expenditure increasing with largesse announcements and fruitless expenditure due to elections in five leading States. These Elections have taken to the Caesar’s predicted death date – 15th March.

CRISIL predicts a slow-down in the agriculture growth from 7.0 percent in 2010-11 to 2.5 percent in the current fiscal. Plagued by high interest rates and slowing economy, manufacturing sector would also decline and it may be less than the predicted decline to 3.9 percent. Mining sector anyway declined due to a spate of scams and Supreme Court directives on further exploration in key areas. Power sector is way behind the requirements of manufacturing and other sectors. The key thermal power in the wake of less explored coal reserves and choked supply channels would continue to shock the infrastructure sector. Equitable and sustainable development demand two essential conditions: respect for human rights and satisfying the basic needs of social development – health and education. The country’s HDI has declined even amidst a growing GDP (lowest in global rankings); there have been gross violation of human rights across the length and breadth of the country. There were anxious moments for the Government in setting its house in order in the shadow of series of scams of huge order. General Elections will be round the corner at the beginning of next year and wooing the electorate with largesse has to be countenanced by him. The challenges before the Union Finance Minister this year therefore are formidable.
Global economy casts its shadow:
According to the Global Economic Survey, both the World Bank and the UN predicted downward growth prospects:
• The global economy is expected to expand 2.5 and 3.1% in 2012 and 2013 using purchasing power parity weights
• High-income country growth is to be 1.4% in 2012 and 2.0% in 2013,
• Developing country growth has been revised down to 5.4 and 6%
• World trade, which expanded by an estimated 6.6% in 2011, will grow only 4.7% in 2012, before strengthening to 6.8% in 2013.
Post-UN and World Bank predictions during January 2012, the Central Statistical Organisation projected a further decline in India’s growth rate for the current year to 6.9%. It is not unlikely that even this figure may not realize when the actual measure ushers in at the end of the fourth quarter.

The fiscal deficit estimated to be around 6% of GDP would hardly find space for further doll-outs. The ray of hope is that the US economy promises a revival. The bail-out package to Europe also lends some credence to keep the balance swinging in favour of arresting unrest in the economy. However, the domestic undoing in the last two years unfolding scams after scams needs tackling firmly and this is where the infirmity lies.

Markets are not going to behave worse if the FM makes bold to increase the Share transaction tax to at least one percent. The advantage is that there are no tax administration costs as all the revenue goes to the treasury through payment gateways with no loss of time. The initial resistance and the drop in the index and the euphoria of pressures would be just a temporary phenomenon. The FM cannot any way bring back to the country even one fourth of the stashed blackmoney stored mostly by Politicians, to save the economy. Preventive measures lack the guts for implementation. There is no strong legislation to confiscate the properties of the corrupt politicians and bureaucrats. The Reforms may move only at snail space.

Stringent measures are the need of the hour to infuse capital in infrastructure development, agricultural production, storage, transportation and marketing. SME sector needs a boost and that is possible if a separate exchange set up is made functional involving banks and SIDBI.

Transaction tax for all high priced commodities like Diamond, Gold, silver and others needs to be introduced to augment the revenues of the government. Leakage of income by keeping a strict vigilance over Corporates and government institutions itself would give a boost to revenue.

It is time to revamp the whole system of data collection in the economy. More importantly, the farmers must be provided input subsidies of a larger scale than now but with laid out crop planning regionally acceptable; investments in drought proofing the economy; and finding resources for merit goods like education and health at double the rates prevailing now.
He has to rejig the incentives for investments in infrastructure in a manner that their delivery coincides with the actual grounding them. Capital flows would be governed by global financing conditions. It is hoped that the next policy announcement from the RBI may see a southward trend in basic rates. Against an otherwise discouraging year we had a job growth and it is hoped that this would continue, particularly in the manufacturing and services sector.

A slightly controversial measure can be the currency transaction tax mooted by the International Cooperation for Development and Solidarity in 1999 itself. Since this requires international agreement, the proposal can be taken to the G-20 for discussion and acceptance.
The other important area is refurbishing capital to the Nationalised Banks that constitute a little over 80 percent of the total global business. The NPAs have shown a phenomenal surge in the recent years not just because of global integration of financial markets and the recession, but due to lax credit risk assessments and monitoring. It is strange that Banks lent to companies like Rs.4500crores to an airline company should not have appointed a General Manager to monitor its cash flows on an on-going basis. The 2-G scam tainted monies pose another big dent into the public sector banks. If the Government keeps on refurbishing capital just because it happens to be the owner and the tier-1 capital needed increase due to implementation of Basel III migration, it is tax payer who has to take the burden and this is going to be huge in the wake of rising business in infrastructure and manufacturing sectors. The risks arising from lending to farm sector and SME sector seem to be a trifle compared to the risks in lending to the emerging sectors. Why should the tax-payer take the hit on these counts? It is time that the FM makes bold to do away with subsidies to the bureaucracy; fuel subsidies within the government itself – it is government vehicles that enjoy substantial fuel subsidy.
My sympathies are with the Finance Minister this year in the gigantic task ahead.

Mother's teachings: Man earns but woman manages

Managing the House is strategic

My father believed in a large family and he fortuitously balanced the gender at home with six sons and six daughters. By the time he was transferred to Tirupati in 1957, the strength of the family was 8 children. As a Head Cashier of a Bank committed to high ethical standards and principled living, his monthly salary of a little less than Rs.250 was insufficient to meet both ends, particularly when the influx of visitors in the pilgrim town was unimaginably high. My Mother not knowing what to do, one day made bold to tell my father to buy a cow and a buffalo giving one litre of milk per time. My father bought both on credit – a good cow was costing those days Rs.750 and a buffalo Rs.500 yielding per time one litre. Luckily, both came with she-calves.

My Mother used cow’s milk to feed the children and buffalo’s milk for curds, butter milk, a little butter -for applying to the faces of the girl-children with haldi-, and ghee. This got a savings of Rs. One hundred per month. The loan raised was repaid in 18months by my father. I was doing my graduation. I used to go to Sri Ramalayam close to our house where under the bright light and serene surroundings, undisturbed by the crying kids of home, I used to complete my day’s lessons. The power consumption at home was under check with my mother switching on the motor only after the maidservant left finishing her day’s work. She was switching on motor only for 10-15 minutes and for four or five times a day. (This is what my wife learnt from my Mother and follows to this day.)

Fortunately, the first two calvings of cow were females. The first female calf of the buffalo did not survive and the second calf was a male calf. So, we had to sell the buffalo at the end of one year to substitute with another with a female calf. My Mother was insistent that I take the calf to the Veterinary Hospital every Saturday for de-worming in the first three-months and thereafter once in a fortnight to ensure that it grew to her expectations to be an yielder after two and half years. Of course, after a decade, my Mother used to say, “I give birth to female children and my animals give birth to male calves – both are uneconomic.” My father had four transfers from Tirupati before he retired and to each place, the cow and buffalo and their calves moved with us. It was from my Mother that I learnt that the economics of a dairy depends upon the progeny. This lesson helped me in financing large number of dairy units to small and marginal farmers successfully when I became the Manager of Agricultural Development Branch of the SBI. Calf rearing is more important than dairy scheme in dairy economics.

We always had a small kitchen garden where greens, chillies, tomatoes are grown. At Bhimunipatnam in Visakhapatnam District, where my father preferred to settle post-retirement, my Mother used to maintain good floriculture, a mango tree, raw banana and banana fruit plants, a pomegranate, and drumstick plant. These with homestead dairy took care of the requirements of evergreen and fully occupied house of grandchildren. Any number of guests for any number of times was most welcome for my Mother thereafter. Managing a house with limited means requires such strategic interventions. Man only earns but it is the woman who manages and manages most efficiently.

Scripting the culture of change

The Chairman scripting the culture of change
It was 20th July 1972 sunny morning. In Visakhapatnam, no English daily would reach the morning readers to relax with a cup of coffee in the early hours of the day. The cool sea breeze on the long verandah was all that was available.

The previous day was tiresome as I spent the whole day till about 10p.m., in the village near Tallavalasa 30kms East of Visakhapatnam taking documents at the village for 90 crop loans I was to disburse, as Agent, Agricultural Development Branch of the SBI. Suddenly, the telephone rang uninterruptedly in the hall, as if it was a wake-up call. I picked up the phone. It was Development Manager (Agriculture) V.S on the line. First question: Did you see the paper today?’ No: was my reply. He said: ‘There is a box item in all the dailies on what you said in the village.’ I replied: Sir, I do not remember to have told anything to the press as I was only taking documents for the Agriculture Cash credit I programmed to disburse.’ The Box item reads: “SBI takes 400 odd signatures even for a hundred rupee loan. B. Yerram Raju, Agent , Agricultural Development Branch, SBI, Visakhapatnam confirms this, while disbursing crop loans for about 90 farmers in Tallavalasa village.” UNI. (I was told that all the dailies carried the item. Later in the month, all the magazines carried the item as a Box item.)
Then I said: I remember that the UNI Correspondent having come to know that the Bank is going to the farmer instead of the farmer coming to the village came to the village and sat through the whole day and must have sent the dispatch. I only confirmed his observation. Then he said: “dear raju: You know the Chairman Shri R.K. Talwar is here in Hyderabad. Yesterday, the Union Minister for Finance, Y.B. Chavan and the Chairman inaugurated the State Bank Staff College and the PR people had put in lot of efforts to put the picture in the front page and down below the photo this box item appeared.” Then I realized what the item caused.
Quickly followed a few more calls: from the Staff Superintendent, District Superintendent, the Regional Manager VNVP Rao – all calling, as if, for my explanation!! My RM said: The Chairman would like you to fly to Hyderabad today and see him by lunch hour.’ There was only one Dakota flight of Indian Airlines from Vizag. I immediately rushed to the Airport after managing the ticket.
I reached at 1p.m and went to the Local Head office to meet my RM and Development Manager. They accompanied me to the Chairman, who was about to go for lunch. “Oh, Yerram is here. Come; let us talk over lunch, he said. My shiver in the pants ceased. Then he asked the Development Manager: did you count the number of signatures on the cash credit document and Demand Promissory Note with the take-delivery letter that the farmer had to sign to get crop loan from us?” He said: “yes sir: it numbered to 427.” Then he asked me: how much time you took to complete the documentation for the 90 farmers? Sir, I and two of my field officers took about 13 hours in the village. We have to complete the disbursement before the cropping season ends in another week to ten days and we have 2000 crop loans to disburse in 30 adopted villages of the bank; even the appraisal form is nine pages , I said. What is the solution?
Sir, “Canara bank takes only a four-page simple document. When the law of the land is same for every bank, why should we take a cumbersome 9-page cash credit agreement? Each blank filled, addition, alteration, etc require the borrower’s signature and under group guarantee, the guarantors’ signatures or LTI. Each illiterate farmer’s thumb impression needs witness of two known persons. All this makes up for the number 427. We have to disburse tens of hundreds of loans in a number of villages ahead of the season.” The doyen of bankers understood the problem. He asked the Development Manager to go over to Bombay Central Office, the next day along with the solicitors from Madras. The team was to work out simple crop-loan documentation within a week’ time. I was to go along with the team to perfect it.
The result: simplified documentation and appraisal procedure for crop loans. This anecdote left an indelible impression on my career as a banker.