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Authors: Ravi Subramanian

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BOOK: The Incredible Banker
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He dialed a number on his phone and picked up the headset. 'Sherlyn, please call Saurabh. Ask him to come to my room immediately. And also tell the rest in the boardroom that the "morning prayers" are over. They can go back to their respective offices.' Ronald was quick and curt.

Within two minutes Saurabh Bhambani was in Ronald's room.

'You wanted to see me, Ronald? What did Varadarajan call for? Anything important?'

'Yes, Saurabh. I have been summoned to see the governor of RBI in the next one hour. Are you aware of anything that I must know before the meeting? In fact he hasn't even told me the agenda for the meeting. He just wants to meet me in person and that, too, urgently.'

Saurabh's face looked as perplexed as Ronalds. 'Do you think it's connected with the investigation, Ronald?'

'Don't know,' said Ronald, as he picked up his jacket from the sofa and walked out of the room. 'Will tell you when I get back,' he added as he walked out into the lift lobby and pressed the lift button.




Early 2007 (A Few Years Ago)
Deputy CEO's Office, GB2
Fort, Mumbai




ANJIT Banerjee, the then Deputy CEO of GB2, was sitting in his office in a very pensive mood. In front of him was the latest RBI audit report on the retail lending business of GB2.

As part of a regular inspection process, the RBI had directed their auditors to spend over three weeks at the bank premises and audit the processes, controls and service delivery. And it was not looking good. GB2 had got over forty-six comments from the RBI, which were basically observations on matters that did not adhere to the guidelines issued by the RBI. An audit comment from the RBI was viewed as negative by every bank management.

In the entire history of GB2 in India the number of observations raised by the RBI had never hit double digits. But this time it was forty-six. Something had gone terribly wrong. A few voices in the bank management opined that the RBI was being vindictive and this was reflective of their approach to foreign banks. Sanjit had stepped in and nipped such talk in the bud. "The RBI had no reason to be vindictive. GB2 was a clean bank,' he had said.

Was it the aggressive growth phase that they had got into? Was it lack of control or inferior process knowledge? Should they induct fresh talent? Would they get to where they wanted by just forcing a reshuffle and putting in seemingly smarter and more capable people in key roles? He did not have any answers. What made it worse for GB2 was that almost all the comments that the RBI had made last year still remained unsolved. No one in GB2 had bothered to act on the issues raised.

The starting point for preparation for any audit was the previous year's audit report and every organisation began by picking up the last audit report and evaluating its processes. A repeat of audit comments in subsequent reports was seen as an absolute lack of control, or at times even lack of intent on the part of the management to fix issues.

These problems were compounded by the fact that two months back an internal group audit had also identified the same set of issues. Yet again these issues remained ignored.

'It can't be systemic. Globally our processes and controls are the best in the industry. It is completely a failure on the part of our people. A clear lack of delivery! They have been terribly lax in the implementation of the issues raised by the audit team,' Sanjit kept rationalising to himself.

In a bank like GB2 even one audit comment was blasphemy, but here there were forty-six of them. It was enough to set alarm bells ringing. And unless he was seen to have taken stringent steps to fix it, his own job would be in jeopardy. As a Deputy CEO, he was directly responsible for all operational issues of the bank.

No wonder there was doom and gloom spread all over his room when his secretary, Sherlyn, walked in. 'Sanjit, Deepak Sarup is here to see you. He has an appointment with you at 11.30. You still have ten minutes. You haven't had any visitors since morning so I thought I'd let you know.' And she smiled. Her smile failed to cheer Sanjit up.

'Send him in. This is important...'

In the next couple of minutes Deepak walked into Sanjit's room, smartly dressed in a dark grey, pinstriped Louis Philippe suit. The smell of naphthalene and camphor from the 'just out of the trunk' suit mildly filled the room. Sanjit felt under-dressed in comparison. Deepak was certainly dressed to impress. It was not often that employees at his level were called by the Deputy CEO for a meeting and he made sure to look the part.

'Good morning, sir,' said Deepak stiffly as he walked into the room.

'Hey Deepak! Good morning. It's always good to see you.' It was clear that Sanjit was trying to put on a very cool behaviour as he did not want Deepak to see through the tension that had gripped him recently. 'Come on in.' Sanjit's handshake was very firm.

Both of them settled on the leather sofa in the corner of Sanjit's room. Deepak had hardly interacted with Sanjit in the past; there was neither an opportunity nor any need! He was the cluster manager for the four branches of GB2 in Mumbai for over two years now. In his chain of command, he reported to the country head of Branch Banking who, in turn, reported to the head of Retail Banking, Ramneek Chahal. Ramneek, too, had just moved into this role a couple of months back, from his erstwhile role as the head of Branch Banking.

An 'A-rater' for the last three years, Deepak held a prominent place in the talent pool of the bank. The 'talent pool' in most companies consists of high-potential individuals who the organisation feels can be groomed for larger roles. Deepak's biggest strength was that he had worked in every unit of the bank and was well-versed with the nitty-gritties of retail banking.

'Deepak, I am not too sure if you are aware why I have called you here.' Deepak drew a blank. He got the summons from Sherlyn and here he was at the appointed hour.

'Ok, then let me start from the beginning. We have just gone through a group audit almost immediately followed by the RBI's annual audit. The group audit was disastrous and the RBI audit was even worse. On the lending side of our business, we have got the worst audit report ever in the history of the bank. I'm really concerned.'

'I can understand, sir,' Deepak replied.

'You know my worry, Deepak? I believe that all this is due to a change in attitude towards audit and controls. And for me...this behaviour is highly contagious. It's like an airborne virus people catch from each other. And when that happens, Deepak, people change. And then they change other people. That's how one man's approach becomes the cause for an entire organisation's downfall.'

'Yes, sir, I agree,' Deepak said, nodding. Deep inside he was wondering why Sanjit was telling him all this.

'Deepak, I called you because I have seen the good work you have done on the branch banking side. I want you to move to the Credit and Risk team as head of Internal Audit and Control for that unit and get down to fixing all the issues that affect their core controls. I want you to bring in a culture of self-restraint, discipline and audit and control. You have to reign in the cowboys there and bring in a semblance of sanity.'

'But Sanjit...,' Deepak didn't know what to say. 'I have never worked in the Credit team before.'

'Deepak, you understand lending. You have worked long enough in the bank and in product management for asset products to understand that side of the business. All your branches and clusters have always been rated satisfactory in their audits. That shows your focus and diligence in dealing with audit and related issues. Process control comes naturally to you.'

Deepak was quite thrilled to be praised by the Deputy CEO. 'Sanjit, I don't want to be a pain in the back but that post is graded at the same level as the current one, and I have already been in this department for over two years. I have been a consistent 'A-rater' and a talent pool member. Why would you move me to a position which places me at the same level as I am currently working in?'

Sanjit's response to Deepak's question was a masterpiece. 'Because, my friend, the situation we are in is nothing short of a crisis. And in a crisis you pick your best man for the job. The reasons you are stating for not taking up this job are exactly my reasons why you must take it up. We need the skills of an 'A-rater' and the genius of a talent pool member to see us through this crisis. If we do not get our credit shop in control, we will be in deep, deep trouble.'

Deepak was at a loss for words. Thoughts deserted him. Sanjit's forceful appeal rendered him speechless. Besides he couldn't have refused the Deputy CEO of the company.

'I understand your point of view. This is an unprecedented situation. Forty-six comments on an RBI audit do not augur well for us and something needs to be done about it quickly. Assuming that I move in, how long would you want me to perform that role? And what happens to me after that?'

'You know that you have a reputation here, Deepak. Everyone values you and thinks highly of you. Don't worry, you will be taken care of. I would expect you to be in this position for twelve months at least. See us through the next audit and I will move you to a good position in business or sales, depending on what is available at that point in time. This organisation does not forget favours and by taking on this assignment you would be doing GB2 a favour.'

Deepak bought into the plan. Relief surged through Sanjit's body as Deepak stepped out of his office. The same evening, after speaking to Ramneek Chahal, Sanjit announced the appointment of Deepak Sarup as head of Internal Audit and Credit Control for the lending unit at GB2.


Dear Members of the Governing Council,


It gives me great pleasure to announce the appointment of Deepak Sarup as the Head of Internal Audit and Credit Control with immediate effect. Deepak will be responsible for managing the entire audit process across the lending business of the bank and implementing the actionables arising out of the group audit and RBI audit comments on a priority.

Deepak brings with him a wealth of knowledge from the branch banking team and is expected to take on this challenging assignment for a minimum of eighteen months.

I request you all to extend all possible assistance to him as he steps into a very difficult and challenging role. I wish him success in his new enhanced role.





When Deepak saw this message, he was miffed. The message spoke about a minimum tenure of eighteen months, but his commitment was only for twelve months. This 'googly' was unexpected. He decided to confront Sanjit.

'Deepak, if everyone thinks you are going to be there for twelve months, no one will take you seriously. Even you would not take yourself seriously. It will take you three months to settle down and in another three months people will start counting the number of days you will hold on to this position,' Sanjit coolly responded.

'I don't want others to know about the understanding we have reached. I am quite happy to confirm this to you separately by mail that will remain between you, me and the HR manager.' Deepak looked convinced and didn't ask any more questions. Sanjit, to him, seemed an honest guy.

Within the next fifteen days, Deepak gave up his cluster and took up the audit and control role in credit with a mandate to rein in the business and credit teams and oversee the implementation of all the audit comments. He had his hands full.




17 December 2009
Fort, Mumbai



ONALD McCain's mind was bubbling with various conflicting thoughts as he entered the lift. What could it be? Why did the governor of the RBI request to see him at such a short notice? 'Request....' He let out a scornful laugh.
He was summoned
. Ronald had no choice but to go and see him. He didn't want the RBI governor to get annoyed.

What disturbed him the most was that Saurabh Bhambani, whose Compliance team normally managed the equation with the Reserve Bank, had no clue about this meeting. In the past all such requests were always routed through the compliance team and that, too weeks in advance. This was the first time he was called directly and without any real notice. Something had to be drastically wrong.

'Why can't these guys manage relationships with the regulators? Why can't they keep them happy? Do all foreign bankers in India have inflated egos when it comes to dealing with regulators, or is it only the GB2 folks ?' Ronald was deep in thought.

He had heard that Citibank dealt very well with the regulators and hence sometimes even got away with murder but GB2 seemed to always end up rubbing the regulators the wrong way. How many things would he have to change ? Had he made a mistake by accepting this assignment?

The lift opened and he stepped out on the corridor that led him to his private parking lot. His BMW-7 was parked there and the driver was ready with the engine and the air-conditioner on, holding the door open for him to get in.

He slid into the comfortable bucket seats at the back and waited for the driver to get in.

'RBI chalo,' he told the driver. He had learnt a smattering of Hindi to get by. The driver was an old timer and didn't need any further directions.

Within minutes the car was on the main road, negotiating bumper-to-bumper traffic and heading towards the office of the epitome of all banks in India.

Ronald took over thirty-five minutes to traverse a distance of four kilometres. All along he had only one thought on his mind. Why? Why? Why? Was it in any way linked to the current investigation? Did RBI find anything suspicious? Had his bank screwed up on anything? Or maybe it was just a casual visit. At times, the governor sought inputs from foreign banks on certain policy issues which impacted them. Maybe it had something to do with that. It could be anything. 'I should keep my calm,' he said to himself, again and again, was all futile.

BOOK: The Incredible Banker
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