Former SBI chairman Rajnish Kumar dispels many wrong notions associated with banks, especially NPAs
Normally one is interested in the early life of a celebrity in the field of say showbiz or sports, which is what prompts people to write about them. When it comes to a banker, there would be very few interested, especially if the author is from a public sector bank. The autobiography of Rajnish Kumar, former chairman of SBI, is a deviation from this perception.
A section on Kumar’s life takes us through his early days and his experiences in various branches of SBI in the interiors of the country. SBI trains everyone on the job by taking the person through different responsibilities in various divisions so that by the time a person heads the bank, one is fully acquainted with all aspects of banking. This cannot be said about most private sector bank heads, who get elevated to the status of CEO without really getting to know the intricacies of a bank job. In fact, interestingly, PSBs rarely falter on processes and procedures because everyone goes through the grind of dealing with cheques, lockers, loans, and, more importantly, people. This is why they tend to be more empathetic when it comes to people management.
Rajnish Kumar, however, is quite hard hitting in his book and calls a spade a spade. He does not spare the RBI, though he is diplomatic when he says that the regulator must have had reasons to give several private parties a banking licence given that some of them went down. He clearly does not see any logic in giving more licences to private parties that do not have long-term commitment. He also does not mince words when he names private banks that stand out compared to the other average ones.
Similarly, he also questions whether the central bank has the bandwidth and experience to monitor the entire financial system, covering commercial banks, NBFCs, cooperative banks and so on. This is why once we move out of the commercial banking ambit, it becomes progressively harder to monitor these institutions.
He makes readers think hard on deposit insurance. Yes, we are all happy that deposits up to `5 lakh are now covered by insurance. But then, so far, the deposit insurance has hardly been invoked whenever there is a crisis as the RBI never lets banks down. If this has been the case, then is there logic to load this cost on banks?
Kumar makes the book really engaging by taking on various issues and dissecting them threadbare. We can sense what bankers went through during the demonetisation time, with several circulars being issued by the RBI. He also highlights how no one thought of the size of the notes in the ATMs, which caused quite an amount of discomfort.
With recollections of some lighter incidents in his career, including dressing up to meet the President in London or dealing with the so-called mafia in the interiors of the country, one would find the narrative interesting.
Without really brushing aside the blame on NPAs, he forcefully tells the reader that all the great infrastructure we see and revel in, which includes airports, is there today because the PSBs have contributed significantly to their funding. True, things went out of hand, but the problem was more in the way in which these projects were taken up. Hence it was not just a case of phone banking, which people like to say. Even the FIs did not do well on this score because of the fundamental challenges in infra finance. Roads have problems of land acquisition, power with availability of coal, steel with iron ore mining and so on. And with all the environment issues coming up frequently, projects were bound to run into problems. He explains why PPP failed in power and roads but succeeded in airports, because the contracts were well structured. Thus, he does not agree with the concept of dirty dozen that was coined by the media when talking of the IBC.
The author also takes us through the details of the Jet Airways fiasco as also the entire NBFC crisis. The Yes Bank imbroglio is explained in some detail. Therefore, for any person in the credit business, this is good knowledge to know the take of the most powerful banker in the industry. The point he drives home constantly in his book is that bankers are not always to blame, and neither are all corporates, as it has been made out to be. This message is powerful and strikes a balance as it asks us to be more discerning when passing judgments on issues of NPAs.
Quite significantly, what stands out is a chapter on people development in SBI. This is something that people rarely talk of. In fact, most corporate biographies or autobiographies are full of the protagonist. But here we have the former chairperson of the biggest bank, which is also in the public sector, talk a lot on the tradition of people management.
This is a differentiating factor from the private sector where it almost always is about a small group of people who seem to drive organisations. In case of SBI, clearly it is the people, as explained by the author.
The book has been called the Custodian of Trust. Is it egotistic? The answer is no, because through the narrative the custodian is the institution called SBI, which has never been personalised. Needless to say, the bank will grow in strength with time.
Madan Sabnavis is an independent economist
The Custodian of Trust: A Banker’s Memoir
Penguin Random House
Pp 261, Rs 699