The Incredible Banker (7 page)

'You are overreacting, Karan. Let Deepak do his job, ' Rajneesh told him firmly. Given that Karan was handling a large part of Rajneesh's business and also was intellectually seen as a competent guy, Rajneesh was perennially insecure of Karan and tried to pull him down whenever he could.

'But this is month-end time, Rajneesh, we will get screwed on our volumes. The asshole screwed up my month-end in the last month too. We cannot afford two bad months in a row, ' Karan almost pleaded.

'If you are sensitizing me to the fact that you might miss your targets this month too, the point has been noted with regret, ' came the sarcastic retort from Rajneesh. His supervisor did not have the guts to take on the credit folks at a time when GB2 was seen as a bank weak on process control by none other than the RBI.

Karan apologised and hung up. He was probably seeking help from a quarter where none was forthcoming.

Deepak, on the other hand, continued his investigation in earnest. Their checks that day consisted of verbal investigations as well as a physical bag search of all present. Every single document available in the sales guys' bags was checked. The entire process of physical examination took over two hours. Work stood still during that time. Karan paced up and down the corridor outside the conference room but there was nothing that he could do.

The physical scrutiny was followed by a few hours of intense grilling. The sales guys were queried on the process they followed, the lead generation process, the conversion process, the approval process, how they dealt with and convinced the customers and even on the way they managed the logistics between the bank, the customer and the involved agencies like the property valuers and law firms.

After a gruelling five-and-a-half hour session, the entire audit process ended at around 2. 30 a. m. in the morning, by which time the entire sales team was mentally and physically exhausted.

Karan, who was outside the conference room all this while, had an uneasy feeling about the entire episode.

'Something is going to go wrong, ' his mind alerted him. He had no choice, but to wait.

He went back home late that night, and was in a very disturbed state of mind. Karan was definitely not among those sales guys who slept easy even on the verge of missing their sales targets. This August he was going to miss his numbers again and that, too, for no fault of his. 'Bloody idiot! I will get him one day, ' he said to himself as his car entered the basement of his building on Carter Road, Bandra.

That night, he couldn't sleep well. However, he was not at all prepared for what came his way the next morning.

K
ARAN drove into the parking lot of the GB2 processing office in the morning. Despite his disturbed sleep last night, he had managed to reach office on time. He was a stickler for punctuality and he rarely missed his 9. 00 a. m. schedule. That day was no different.

As he was driving in, he saw a black Scorpio reverse out. It nearly banged into him but he braked just in time and saved his Honda City from any collateral damage. Not a good omen! He was about to scream at the driver when he saw who it was – the Scorpio had Deepak at the wheels. Karan controlled himself. Was Deepak coming to the office, or was he leaving? If he was leaving, why was he leaving at that time of the day? The look on Deepak's face didn't give him any comfort. He ignored him. 'Focus. Focus. There is a target to be achieved, ' he told himself as he removed his laptop bag from the boot of the car.

The day was chaotic. Karan and his team tried their best to meet their targeted volumes but nothing moved at the pace they wanted. Savitha was at her casual best that day. She was not serious about anything. The loan applications she was managing were getting stuck but she didn't seem to be bothered about it. Customers were suddenly not available to sign loan documents and deals were left hanging. Karan was at his wits' end, trying to push her to take her loans to closure. But all his screams, threats, orders were falling on deaf ears.

At around 3. 30 p. m., Savitha walked up to him.

'Karan, I need to leave, ' she told Karan.

'What? Are your cases under control?'

'Kind of. ' She was non-committal.

'What do you mean "kind of"? Where are you going? You are not even at 50 per cent of your monthly target. What's the problem, Savitha?'

'Karan, Aakansha is not keeping too well. I need to take her to a pediatrician. Have to leave now. My maid just called. I have given a handover of my cases to Xerxes. He will see them through. I will be in touch with him on the phone. '

When someone cites illness of their child as a reason there is no way one can ask them to stay back and work. Karan was no different. He just said 'Ok' and walked away from there.

Savitha left office and drove towards Bandra. She reached home in thirty-five minutes. There was no traffic at that time. She parked her car in the parking lot and got off. She did not pull out her laptop bag but picked up her handbag from the car, locked it and walked out of the gate straight into a waiting black Scorpio.

'Hi baby, ' she said as soon as she got into the car.

'Babes, I was waiting for you. What took you sooo long?' said Deepak as he moved towards Savitha and kissed her lightly on the lips. He cranked the ignition and the car moved. In no time both of them were cruising towards Manori Bel, a resort on the outskirts of Mumbai.

Somewhere along the way as they were crossing Goregaon, she looked at Deepak and said, 'You were great yesterday. Karan really looked stressed. '

Deepak just smiled.

'I can't work with him any longer. He is becoming such a pain. Even today he literally screamed at me. '

'Don't worry, babes. Soon he will be history. '
Deepak assured

her.

'But I don't think I want to be here for long. Is there a way to get me into your team, or into credit?'

'You really want to... ?'

'Yes, Deepak. That's the place to be in. '

'Hmm... ok. Let me speak to Bhisham. Something may come up. '

She hugged him in return.

'You have earlier been in a product role and a sales role. So I am sure we can use this experience to justify a role in underwriting or policy-making. '

'Wow, baby! That would be great!' And she gave him such a huge hug that the Scorpio wobbled a bit before getting back on track again.

While Deepak and Savitha were in Manori enjoying a wonderful evening, Karan was debating the merits of a loan application which had been turned down by Amit Sharma. His conversation with Amit was interrupted when his phone rang. He looked at his mobile and then back at Amit. 'Boss on line, will come back in a minute, ' Karan said and then picked up his phone.

'Hi Rajneesh. '

'What the hell is this, Karan?'

'What, Rajneesh?'

'You haven't seen it?'

'I am not sure I know what you are talking about, sir. Is there a problem?'

'Have you seen the investigation report on the mortgage sales which Deepak has sent this morning to me, Bhisham, Ramneek and Sanjit?'

'No, Rajneesh. It has not been marked to me. When was it sent?'

'It was sent this morning. I have been out whole day and got to see it only now. Anyway, I am sending it to you now. If what has been written in the report is true, you have some serious explanation to do, my friend. ' Rajneesh's words sounded ominous.

Karan was left wondering about the report when Rajneesh hung up. 'Isn't it the protocol in any audit that the audited party gets an opportunity to defend all the comments raised before a final report is circulated to everyone?'

He could have taken this up and batded it but in the current scenario, where audit seemed to be everything and with a boss like Rajneesh who would not stand up for him, it was better that he did not go on the front foot. 'Never get into a battle that you are sure to lose, ' someone had once told him

Rajneesh's email popped up on the screen in front of him. He clicked open the mail. As he read the contents, he forgot the discussion with Amit Sharma on the contentious loan case.

He checked the time; the mail was sent at 8. 52 in the morning. That explained why Deepak was leaving when Karan was coming in. He had in fact stayed up the entire night to prepare the report and get done with it before anyone came in. How vengeful could anyone get?

The mail which Deepak had written to Sanjit didn't really say much. It was a very matter-of-fact mail which just said that the mortgage sales audit report was enclosed. Very unlike Deepak! Deepak was a notorious political monster who always revelled in sensationalizing things. Even during his days in branch banking he would play one against the other and work his way up. He was not known to be straightforward.

Karan quickly clicked on the icon named 'Mortgage audit report – August 2007'. The computer was slow. The attachment took some time in downloading. Karan was getting restless. He wanted to know what were the issues Deepak had highlighted. Eventually, after a long wait, when the word document opened, he found it was a twenty-two page report. Quite a long one for an audit which ended at 2. 30 p. m. the previous night.

K
ARAN 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!