The Incredible Banker Read online

  The Audit Report and Its Aftermath

  September 2007 Onwards

  GB2, Mumbai

  KARAN read through the audit report in a hurry. It was severely scathing about the sales processes followed in the mortgage business in western India. It raised many issues intrinsic to the sales discipline and a few issues related to Karan's leadership and management style. As he read through the report, he was even more shocked. The report was personal. It was not a business audit. It seemed to be an audit which passed value judgements on him as a professional, a leader and on his skills. It was blatantly unfair that such a report was sent to the senior management of GB2 without allowing him a chance to go through it and present his side of the story, which was a norm in the industry.

  The report raised certain fundamental issues.

  The first big observation was the result of the bag check of all the sales guys. The report revealed that a number of sales guys were carrying blank home loan agreements signed by the customers. Four of the ten sales executives in the room that night had blank but signed loan agreements in their possession, and almost all of those loans had not even been approved. This meant that the customers were made to sign the loan agreements even before the loan was approved. The terms and conditions of the loan were left vacant.

  Deepak's had deduced that the sales guys would have got them signed by the customers telling them that the loan had been approved, else no customer would sign a loan agreement... and that too a blank one. According to Deepak this indicated wrong commitments were being made to customers and this would also result in serious customer service issues in case the loans were to be declined later. "This brought in a significant reputational risk to the GB2 brand, apart from being an incorrect sales practice, ' Deepak had said in the report.

  'Getting a loan agreement signed by the customer is a tacit acceptance of the fact that the loan has been approved by the bank. If any loans were to get declined later on, the customer would be well within his rights to ask difficult and embarrassing questions from the bank. If 40 per cent of the sales guys had blank signed loan agreements, it only shows this process is rampant and is happening on a large scale, ' he had further said in the report.

  'In the last two months three large value loans have been cancelled after the loan was disbursed. The investigation team spoke with the concerned credit and sales officers and also with the customers. The customers vehemently pointed that while they had applied for the loan, they had categorically asked the bank to hold back the loan disbursals because they were yet to sort out some issues with the seller of the property they were buying. These three customers also said that they had mentioned this to the sales manager at the time of signing the loan agreements. The sales managers seem to have manipulated the blank loan agreements and got the loans disbursed by filling up the agreements themselves. Once the cheque was disbursed, the only way out was to cancel the cheque and neutralise the loan. ' The audit report gave examples of three such cases in the last two months and also transcripts of discussions with the customer where the customer said that he had never agreed to the disbursal of the loan.

  A shocking fact identified in the investigation was that the bags of the sales guys contained a few application forms of Standard Chartered Bank (SCB). Complete sets including SCB application form, income documents, identity proofs, etc. were recovered from the bags of the sales guys. This could only happen under two instances. Either the sales guy was parallely working for SCB while he was employed with GB2, or he was buying loan applications from someone in SCB. Both of which were not acceptable sales practices.

  What made it worse was that Deepak had categorically mentioned in his report that no one from the leadership (that is, Karan) ever checked their bags or did a spot checking to find out what was going on. In effect, it meant that there was a serious lapse in the monitoring of sales processes.

  However, the worst was yet to come.

  From the bags of almost all the sales guys the audit team found valuation reports and legal opinions about the properties their customers were buying. This was perceived as a big risk. At GB2, the sales guys were banned from interacting with the valuers and lawyers. The rationale was that the valuation and legal opinion determined the quality of the collateral – offered as security for the loan. Given the sales' vested interest in getting the loan through, there was always the risk that the sales guys would make an attempt to influence the quality and correctness of the valuation and legal opinion. Hence the sales guys talking to valuers and lawyers was a 'strict no' in GB2.

  The fact that sales guys were influencing valuers would have been difficult to prove unless the valuer agreed to it. Deepak and his team had interrogated valuers who had confessed to this breach. Deepak had clandestinely done this leg of the investigation by taking Amit into confidence. The two of them had even visited the valuer's office and seized his computer. They made him log into his mails and checked his mails. And there they had discovered mail exchanges between the valuer and the sales staff. This was the 'killer evidence'.

  During interrogation, four sales guys, too, had confessed to speaking to the valuers and influencing them to give a higher valuation of the properties being funded. They also told this was a rampant sales practice and was known to almost everyone in the sales teams.

  Even though this was a control lapse on the part of the credit team, it pointed to a larger issue – one of personal integrity of the sales teams.

  It went on to say that if Karan didn't know of these issues, there was a serious dearth of supervisory control in the team.

  There were two other key issues about management practices raised by the audit report. First, that the loans booked in the last three days of the month came at a significantly lower rate than the loans booked during the rest of the month.

  The loans in the last three days came in at a rate of interest which was 75bps (0. 75 per cent) less than the rates at which the loans were disbursed in the first twenty-seven days of the month. The drop in the last three days was significant and was highlighted by the audit report as a cause of concern. It also tabulated the comparison for the previous six months which was not different.

  And secondly, an analysis of the delinquency of the home loan book was also enclosed which showed that loans booked in the last three days of the month performed significantly worse than the loans booked earlier. The audit report thus said that a number of credit norms and sales practices were compromised in the last few days of the month to book incremental business and meet sales targets.

  The summary of the audit report severely indicted Karan and lashed out at the fraudulent sales practices.

  'Overall the audit of the mortgage practices shows that there is a severe failure of sales control, monitoring and leadership. The sales team has indulged in a number of questionable professional practices which have gone unnoticed or have been wilfully ignored in the quest for achieving monthly targets. The PFS business is advised to seriously relook at the mortgage sales process and leadership in the sales teams. ' Thus ended Deepak's audit report with far-reaching consequences.

  This was the closest it could come to saying that Karan was a jackass who needed to be moved out immediately. Deepak couldn't have said it directly but he had indirectly hinted at it.

  Karan was totally peeved. First Deepak sent an SMS inciting people to plot against him. GB2 didn't do anything about it. In fact they let Deepak go scot-free. And now, he had written an audacious audit report which severely dented his credibility. No one would believe Karan. He knew that.

  He called Rajneesh that night. It was a difficult conversation. The audit report couldn't be defended. More importantly, Rajneesh was not willing to listen. He had proven to be a spineless boss.

  'You have completely screwed it up, Karan, ' he said angrily. Karan wanted to retort but better sense prevailed. For the last twenty-two months he had been delivering on his numbers without fail but just because he faltered one month and some vindictive asshole
gave him a poor report, he couldn't overnight turn into a dodo. He knew he was good but Rajneesh was going ballistic. Karan knew that Ramneek Chahal would be putting pressure on Rajneesh but he expected Rajneesh to support him better.

  'You know the pressure on growing mortgages. For two months in a row you haven't delivered on your numbers. What do you expect me to do? I have to answer difficult questions. How will you explain this audit? You are not making life easier for me!'

  'But, Rajneesh, you know the issues we have had with credit. They just don't seem to share the same sense of urgency. And now with Deepak moving into audit and control, nobody there seems to be bothered about business growth, ' Karan tried to explain.

  'Karan, I am fed up of listening to excuses. I do not have time to manage these issues. Either you learn to manage stakeholders, or I will get in someone who does. Is that clear? In any case we will now have to respond to these audit comments quickly. I am sure Sanjit and Ramneek will come back very strongly on this. Let's chat after month-end, ' and Rajneesh hung up.

  Disappointment got the better of Karan. He left work and headed home. He didn't even feel like doing anything. Deepak's behaviour was understandable, given all his grudges against Karan. But he had expected Rajneesh to understand him. Rajneesh should at least have heard him out. Given him a chance to explain his position before condemning him. That's what good leaders normally do. Listen to both sides and then make up their minds. Rajneesh didn't even bother to listen to his side of the story.

  Bhisham played his game very smartly. Realising that the only thing which could be traced back to his team was the lack of control on the valuation agencies, he responded very quickly and coerced the poor soul handling the valuation process and the vendors to resign. Even before Karan or Rajneesh could react, he had taken his action and covered himself.

  Karan had become a marked man. Someone who was a star till about three months back, was fast becoming a liability, and that too because no one was willing to stick their neck out and back him. It was true that there were flaws in the unit that Karan ran. However, no one tried to find out the root cause or even tried to identify the reasons why those flaws existed in the first place. It was easy to just blame one individual for all the problems and everyone was content doing that as long as it saved their necks.

  At the month closing of August, Karan ended at 72 crore of home loan disbursals. A far cry from the target of 110 crore!

  The Next Six Months

  Q4 2007-Q1 2008

  GB2, Mumbai

  THE next six months were very momentous in the lives of all the GB2 players.

  Karan was totally disillusioned with the way things transpired subsequent to the audit report and two months of below-target performance. He had always held that one or two months of poor performance did not make someone a good or poor performer. No one could be a star for years and a dud the next month or vice-versa. But Rajneesh didn't feel so. And that was beginning to impact Karan.

  Looking for a job outside GB2 was a temptation which Karan had never succumbed to, despite extreme pressures. However, this time he gave in. He was very well regarded in the market and it was just a matter of time before Citibank hired him to head their distribution for all loan products in western India. They even offered him a hike of 20 per cent. The day he got the offer letter from Citibank, he quit GB2. He had no motivation to work there any longer. He felt tremendously undervalued. If only Rajneesh had had the spine to help him deal with the politics, he would have stayed. But his boss, the head of mortgages, was so busy cementing his position and protecting his skin in the control-oriented regime that Karan's pleas fell on deaf ears.

  On the other side, the romance between Savitha and Deepak was making much headway. They became a lot more open about their relationship. They would take coffee breaks and lunch breaks together and even come and go at the same time. Deepak started leaving office early so that he could spend time with Savitha before he went back home.

  This gave fodder to all gossipmongers but that did not deter either Deepak or Savitha. Oblivious of what people around them were saying, they continued bonding with each other.

  Savitha's move to credit made life easier for Deepak. In fact it was Deepak who choreographed that move. When Deepak's audit report was released and Bhisham terminated his head of vendor management for the laxity shown in the management of valuation agencies, that position fell vacant.

  Deepak met with Bhisham the day he had terminated his resource.

  'Bhisham, thanks for taking action on my report. I didn't want to recommend action on the credit folks for obvious reasons. I would rather speak with you than put anything on record about the department I work in. I hope the sales guys also take the cue from you and do something about their people. By the way, have you thought about the replacement?'

  'Not yet. Do you have anyone in mind?'

  Not really...but now that you ask, what do you think of Savitha?' Deepak casually forwarded her name.

  'Who? That girl in mortgage sales?'

  'Yes,' nodded Deepak.

  'Do you think she will fit into the role?' Bhisham seemed a little skeptical.

  'Bhisham, mortgages is going to be our greatest focus area. And she has spent enough time there. She understands the business and the risks. And, in fact, she is the one who tipped me off about sales guys interfering with the valuations. So, she is high on integrity too.'

  'Will she be interested?' Bhisham was straightforward; he had no clue of Deepak's intentions.

  'I can ask her if you want me to.'

  'Fine...ask her. If she is interested, tell her to meet me tomorrow.'

  'Sure,' and Deepak left.

  The next day, Savitha met Bhisham and had a long discussion with him. At the end Bhisham was convinced that she was a good resource.

  After she left, Bhisham called Deepak. 'She is very good, yaar. Knows her stuff. We will take her.'

  'How do we do this, Bhisham?'

  "The internal job posting is getting released tomorrow. Ask her to apply. While we have a process to follow, tell her that we will select her from the lot of applicants.'

  Sixteen people applied for the job the next day. Twelve were shortlisted and interviewed. Of the twelve, Savitha was finally selected.

  Within forty-five days, she moved into her new role as 'Head -Vendor Management' for GB2. Though she had to directly report to Bhisham, it was a job at a much lower level as compared to Deepak's or Karan's, despite the fancy designation of 'Head – Vendor Management'.

  Savitha was happy. Her gamble on Deepak was paying off. She got to move to the same office as Deepak and hence the two were very close at work, too. Life was beginning to change for the better for her.

  Deepak was extremely thrilled with her appointment as he could spend more time with her. Everyone around was envious of him. Despite her age, Savitha looked gorgeous. She didn't, for a moment, look like the mother of an eight-year-old girl. On the other hand, Radhika was blissfully unaware of her husband's escapades and continued to believe that he was a loyal and devoted spouse. How terribly mistaken she was!

  Life was one rocking party for Deepak and Savitha, or so he thought, till a fateful day in early January 2008. A shocking piece of news hit Deepak like a bolt from the blue.

  He was at his workstation giving finishing touches to an update which Bhisham had requested. Casually, he went to his inbox and clicked on the 'Refresh' button. Four new mails were downloaded. One was an update from his team member. One was a message from Savitha. He quickly opened it. It was a simple message, which just said 'I Love U baby'. He smiled and sent a reply. 'Me2222222222,' it said. The third one was a mail from internal communications which said: 'Protect your password'. He didn't even read it, just clicked 'Delete' and the message was trashed. In MNCs such messages were regularly sent as a part of adherence to global guidelines. GB2 was no different.

  It was the last mail, however, that caught his attention. The subject was – 'Organisational announce
ment'. 'Who is moving now ?' he said to himself as he clicked open the mail. It was a mail from the CEO to all employees.

  Dear Colleagues,

  With great regret I announce to you that Sanjit Banerjee, our Deputy CEO, has expressed his desire to move on and pursue interests outside GB2 in India. Sanjit is a close friend and a wonderful human being. While I am sad to lose him, I wish him good luck in all his future endeavours.

  Sanjit's replacement will be announced in due course.

  Regards,

  Girija Vaswani

  CEO

  It was a short and crisp message which turned Deepak's world topsyturvy. He was worried. He dialled Savitha's number.

  'Pick up, pick up...pick up...,' he muttered under his breath, waiting for her to pick up the phone.

  When she didn't, he got up and walked to her desk. She was not there. He was irritated. 'Where the hell is she?' He came back to his desk and dialled her mobile. 'I am in the loo. I will call back,' she whispered. 'What the hell! Couldn't she have found a better time to lock herself in the loo?' he grumbled as he made his way back to his cubicle.

  Within a couple of minutes Savitha was at his table. 'What happened? Why are you so jumpy?' She had sensed it in his tone.

  'Have you seen Girija's mail?'

  'What mail?'

  'Sanjit's leaving!'

  'Oh that one. Yeah, I heard of it yesterday.' Bhisham was telling someone.

  'Why didn't you tell me, you idiot?'

  'Arre, I didn't get a chance. And how am I to know that it would interest you so much?'