Excerpts | Roller Coaster: An Affair with Banking by Tamal Bandyopadhyay | The Financial Express

Excerpts | Roller Coaster: An Affair with Banking by Tamal Bandyopadhyay

In these excerpts, Tamal Bandyopadhyay gives fun facts about two bosses that helped in the reconstruction of Axis Bank after it was renamed and rebranded from UTI Bank

Excerpts | Roller Coaster: An Affair with Banking by Tamal Bandyopadhyay
By end-December, the bank had a deposit base of Rs 3,700 crore; the target for the financial year ending on March 31 was Rs 4,200 crore. (Dhiraj Singh/Bloomberg)

V Vaidyanathan has been in the saddle for just three years. Aditya Puri was at the helm for 25 years; Uday Kotak since 2003. Both have created a certain culture and ethos, which HDFC Bank and Kotak Mahindra Bank stand for. Axis Bank has changed its name and, periodically, its culture.

In the initial years, when it was called UTI Bank, it had SBI’s culture. Many of its executives, including the boss and the second-in-command, came from an SBI subsidiary, State Bank of Bikaner & Jaipur. (It was merged with SBI in March 2017.)

PJ Nayak, a bureaucrat, transformed the bank, soaked in public sector culture, into a private bank. Even though he was a bureaucrat, he was not exactly fond of business enterprises owned by the government and had strong views on many things. From Unit Trust of India, where he was executive trustee, Nayak joined the bank as a director in December 1999 and took over as CMD on January 1, 2000. Little over a fortnight later, on January 18, he held his first meeting with the bank’s senior executives in the boardroom at its headquarters at Maker Tower F, Cuffe Parade, Mumbai.

By end-December, the bank had a deposit base of Rs 3,700 crore; the target for the financial year ending on March 31 was Rs 4,200 crore. Nayak, just 18 days in banking, persuaded the team to raise it to Rs 4,700 crore. By March-end, the deposit pile rose to Rs 5,200 crore—a growth of almost 50 per cent in just a quarter!

That’s the beginning of the race, which continued till April 2009, when Nayak left office, just a couple of months shy of completing his second two-year term.

Blank vertical book template.

How did he do it? Within months of taking the helm, he raised the staff ’s salary by 30 per cent (they were the least paid in the private sector) and ensured they got stock options. He never accepted too many options—certainly much less than bank bosses typically get. At one stroke, he created pride in his employees and a sense of ownership.

His bureaucratic trait was visible in his belief in hierarchy. A stickler for time, he would do extensive homework for whomever he met or someone with whom he travelled in the same car. And he had interests beyond banking. When he travelled to Kochi, the local operations head had to brush up on all socioeconomic statistics to engage him in a meaningful conversation.

Often the managing director of a company would get to know something from Nayak about his own company that he was unaware of!

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He was a leader with a vision for the bank, an eye for detail, an elephantine memory, and the power of execution, but his Achilles heel was a poor understanding of his colleagues’ capability.

In business, the most critical choices one makes relate to people. As a boss, he was a good judge of good people and a bad judge of bad people.

Remember the phrase “Trust, but verify”, which Suzanne Massie, an American scholar, taught to President Ronald Reagan. She was the US president’s adviser on Russian affairs. She prepared Reagan for the nuclear disarmament discussions with the Soviet Union with this.

Nayak trusted his lieutenants blindly, never verified. Many took advantage of that. Some say he was aware of his colleagues’ shortcomings, but he continued to back them as they were delivering. He had the big picture in front of him.

When the parent UTI wanted to split the post of the CMD to clip his wings, he threatened to quit. UTI promptly changed its mind (probably at the intervention of the finance ministry).

In another instance, he actually stormed out of his office and quit. That was a fallout of the merger talks of Global Trust Bank with UTI Bank, which eventually did not happen.

It was disgraced UTI Chairman PS Subramanyam’s initiative. The process started in December 2000 and was called off in April 2001.

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When a joint parliamentary committee (JPC), which probed the stock scam of 2001, made a mention in its report that Nayak, as UTI Bank boss, “stood to gain personally from the merger”, and asked for a probe on managerial failure in not getting due diligence conducted, anomalies in the decision-making process, and lessons learnt regarding any future merger talks, Nayak packed up and left his office.

He returned a week later, only after a two-member committee appointed by the bank board exonerated him.

Nayak had lost the board’s confidence on succession by the end of his tenure at 62 (he could have continued but settled for a two-year term, his second extension, till July 2009). Nayak had groomed an insider for the top job, but the board did not find the person suitable. That’s how Shikha Sharma, then head of ICICI Prudential Life Insurance Company, walked in.

In protest, Nayak cut short his term by a couple of months. Two years before that, UTI Bank was renamed and rebranded as Axis Bank in July 2007.

The last time a bank changed its name—not following a merger or acquisition—was in 1955, when Imperial Bank was renamed State Bank of India. The campaign for the name change, “UTI Bank is now Axis Bank”, was based on the premise of identical twins.

“Finding twins is tough,” Sumanto Chattopadhyay, group creative director, O&M, who created it, had said. “But some of the twins, like the two little girls in the commercial, were so charming that it was completely worth the effort. By the end of the shoot, we ourselves were getting confused about who’s who.”

Nayak didn’t fire a single employee of the then massively underperforming workforce. Instead, he had reconstructed the bank almost entirely with the help of people from within. He had picked up only two senior executives from UTI—one a legal expert and the other for corporate loans.

Sharma, too, reconstructed the bank and made a big bet on the corporate loan book, but to do this, she brought in people from outside.

Internal Job Portal

Insiders joke that after Sharma took over, they began to refer to the bank’s IJP, or internal jobs portal, as I(CICI Bank) JP(Morgan)! For every important position, she brought in people from outside (mostly with ICICI Bank connections) and made the insiders insecure and lose their sense of ownership of the bank.

She introduced the bell curve for performance appraisal, weeding out many employees, including the senior officers. Despite all these, the Axis Bank employees remember her for the lovely handloom saree they got as a Diwali gift every year. Opinion within the bank differs on her HR strategy. Many say Nayak’s tolerance level for non-performance was high; as a result, the private bank developed a culture of a public sector undertaking where job security was taken for granted. Others feel Sharma’s aggression on the HR front changed the bank’s culture—from collaboration to competition.

In contrast to Nayak, her time management was awful. If a meeting was slated for 10 am, people would be happy if the boss walked in by 10.30. Even that’s an understatement, one bank executive says.

She was extremely sharp and put the fear of God in the employees. She would read the relevant papers only before a meeting and skim through a dozen files quickly but ask the most difficult questions at the meetings for which others were often unprepared, despite extensive homework.

Even though Sharma never dropped Chanda Kochhar’s name in any meeting or even private conversation, the rivalry between Sharma and ICICI Bank’s Kochhar is something many bankers love to talk about. Sharma’s aspiration was probably to make Axis Bank a bigger and better ICICI Bank. She mainly focused on retail assets and left the wholesale book to the corporate banking head.

Paying too much for acquiring an investment banking business and chasing corporate loans as if there’s no tomorrow are manifestations of such aspirations.

As bad loans piled up, the RBI did not allow Sharma a longer tenure.

After taking over the mantle from Nayak in June 2009, at the first offsite of senior bankers in Udaipur, wearing a long skirt, Sharma led the team on a “fire walk”, as a confidence- inducing, team-building gig, thought up by one of the big consultancies.

She knew the art of walking on hot coal—pacing is the secret. If you’re too slow, the coals have a chance to burn your feet. If you’re too fast, your feet will sink deeper into the layer of ash, also increasing your chances of being burned. She was a master of firewalking—walking swiftly without rushing.

Unfortunately, she could not keep the balance till the end. Too slow in plugging the loopholes in strategy and too fast in changing the culture, Sharma found herself in the doghouse. It was a journey from super confidence to extreme vulnerability.

How did that happen? That’s a separate story.

Excerpted with permission from Jaico Publishing House. The book is slated to be released on January 10

Roller Coaster: An Affair with Banking

Tamal Bandyopadhyay

Jaico Publishing House

Pp 340, Rs 499

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First published on: 01-01-2023 at 02:00 IST