Kolkata: In the early 1990s, in a small town in Karnataka, the general manager of a public sector bank launched an initiative under which all key bank officials in that town got together and started sharing notes on all things banking.
In those days, there was no credit information agency, and bankers, too, weren’t willing to discuss business with competitors, recalls the banker who started the initiative.
“But when defaulters eventually saw the scooters of the eight general managers (in that town) parked together, they knew the banks were going to go after them jointly” he said, speaking on condition of anonymity.
Around the same time, in another small town in yet another state in south India, Kerala, bankers got together and managed to restart clearing of cheques after agitating trade unions had blocked the clearing house there.
“Such was the understanding among bankers there that cheques were cleared across the counter… You could say we had created a parallel clearing house,” said another banker from Kerala, who, too, did not want to be named.
There’s a lot that bankers could do if they got together and started exchanging notes, says K.R. Kamath, chairman and managing director of Punjab National Bank (PNB). Kamath should know what he is talking about as he revived Kolkata’s bankers’ club in August 2008 when he was chairman of Allahabad Bank. Kamath moved to Delhi, where PNB is based, in October.
The bankers’ club in Kolkata was founded in the early 1990s, but by 2000, its activities had slackened and finally by 2002, it became “almost defunct”, according to Ashok Dutt, general secretary of Kolkata’s bankers’ club and a general manager at Allahabad Bank.
The main problem facing such an initiative is the transfer of key functionaries to other cities. “Sometimes all office-bearers would get transferred at one go,” Kamath says.
As a junior officer, Kamath had realized the importance of “sharing market intelligence”. “Junior officers do not have access to forums such as the Indian Banks’ Association (IBA) or the state level bankers’ committee (SLBC),” says Kamath.
IBA is the national banker body that brokers the wage deal for nearly a million bank employees once in every five years and is the interface between the government, the regulator and the industry. SLBC is a state body where bankers discuss directed loans and other common industry issues.
All officers of the rank of assistant general manager and above are members of Kolkata’s bankers’ club, which currently has some 250 members. “It’s an excellent forum which could be used to discuss a lot of things… some even informally, which in forums such as IBA or SLBC may not be possible,” says Kamath.
Soon after arriving in Kolkata, Kamath convened a meeting of key executives of the three public sector banks headquartered in the city—Allahabad Bank, Uco Bank and United Bank of India—recalls Dutt. “In that meeting, a consensus emerged that the bankers’ club should be revived,” he says.
The first major event that the club hosted was an interactive session with V. Leeladhar, former deputy governor of the Reserve Bank of India (RBI), in Kolkata in November last year. Since then, RBI governor D. Subbarao has addressed the club twice, and finance minister Pranab Mukherjee once.
“Though the chairmen and directors keep meeting these people often, junior officers get opportunity to interact with them only through such events,” says J.P. Dua, chairman and managing director of Allahabad Bank.
The body came particularly handy in late 2008 and early 2009 during the time of the credit crunch following the collapse of US investment bank Lehman Brothers Holdings Inc. Kolkata banks could keep a tab on flow and quality of credit, sharing market intelligence at regular club meetings.
The scope is enormous and though since November last year, the Kolkata bankers’ club has hosted several interactions with key people, its members should meet more often among themselves to discuss “local banking related issues”, says S.C. Gupta, United Bank’s chairman and managing director.
“There should be more emphasis on internal deliberations; Kolkata’s bankers should meet more often… This isn’t happening at present,” said Gupta.
More than being a platform for sharing market intelligence, the Bankers’ Club worked as a forum to host important people from RBI and the finance ministry, says Dipak Rudra, who was chairman of Uco Bank between 1993 and 1996.
“Those were difficult days for bankers,” says Rudra. “NPAs (non-performing assets) were the biggest problem for the weak banks, particularly those headquartered in Kolkata, and there was hardly any cooperation between the weak banks and stronger ones, at least in those days.”
To recover costs, the club charges an annual membership fee of Rs1,200, and collects around Rs3 lakh a year, according to Dutt.
Meanwhile, Kamath is looking to revive the one in the national capital.
“I have called a meeting of the heads of the various public sector banks in Delhi… We hope to soon have some active 250 members in Delhi as well,” Kamath says.