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“Internet banking is required by the poor, not the rich”

“Internet banking is required by the poor, not the rich”
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First Published: Sat, Jul 21 2007. 12 11 AM IST
Updated: Sat, Jul 21 2007. 12 11 AM IST
As I get up to greet Kamalesh Chandra Chakrabarty, I am already feeling guilty.
I had showed up at Oh! Calcutta, the hit restaurant of Anjan Chatterjee’s growing culinary chain, in khakis and an open-collar shirt. But the chairman and managing director of Punjab National Bank (PNB) enters in an immaculate two-piece blue suit. As he strides up to our corner table in a nearly empty restaurant, he also apologizes—for being late.
Late? It is 7.31pm and Chakrabarty is barely a minute late for our “no agenda” dinner appointment, which I had scheduled for a Saturday night. He is just two weeks into a new job, getting his arms around India’s largest nationalized bank as its new chairman and managing director and so far hasn’t had time to meet with anyone from the media. To add to my guilt, the Chakrabartys had just moved from Chennai and were still living in temporary digs as PNB scrambles to fix their official residence.
It is a bit of an awkward start for this particular Business Lounge, which is all about getting industry captains to shed their ties. I try to break the ice with small talk as we settle on a Chivas with soda for him and a Glenlivet for yours truly.
I had deliberately suggested Oh! Calcutta, figuring a two-year stint in Chennai, as the head of Indian Bank, has probably deprived Chakrabarty, a Bengali who grew up in Orissa, of good bhetki and hilsa. And it appears to be working as he switches to Bengali with the chatty wait staff. Quickly dismissing the inch-thick menu and its elaborate descriptions of the myriad ways the chef could serve up a fish, he simply tells them to “give me some good Bengali fish”. The waiter says he will also bring some rice and maybe a dal to go with it.
As I would discover throughout the evening, the formal attire, the unassuming food choices and the apology for coming late are all little, yet telling, signs of Chakrabarty’s personality. Despite 29 years in the industry—26 with Bank of Baroda (BoB)—in which he has created a solid track record of improving results, and a heady climb to the top echelons of public sector banking built on a public persona of plain speaking, in private, Chakrabarty remains an unassuming and modest chieftain who has never really forgotten his humble origins. The only male among six siblings of immigrant parents who moved to India from then East Pakistan, he initially grew up in a tribal area in Orissa where the nearest bus station was 50km away, before being shipped off to grandparents in Varanasi so that he could get a decent schooling.
“You have abilities and intelligence that are god given and can work hard but, in all these, you need luck,” says Chakrabarty when asked to reflect on what got him to where he is today. “All said and done, there are much better people than me, much more intelligent people,” says the 55-year-old. “When I was a small child, I had never thought I will come up to this level.”
Banking, he notes, was somewhat accidental. A meticulous student with a penchant for numbers, Chakrabarty scored a gold medal in MSc (statistics) followed by a PhD and the inevitable teaching route, which lasted five years and coincided with the tumultuous last few years of Indira Gandhi’s 1970s prime ministership. In between, Chakrabarty passed up on a chance to study in Canada, stunning a professor at Benaras Hindu University who had even arranged for an associateship for his prodigal student. The reason: Chakrabarty’s extended kin had lost some family members of those who went abroad and so decided that leaving India “does not suit our family”, he recalls.
But five years of teaching statistics also meant that Chakrabarty increasingly veered around to the idea that he didn’t want to spend the rest of his life regurgitating the same lesson plans over and over again. So, when he spotted an ad for a planning officer, he applied, got in and in 1978 began what is still a bit of a love affair with BoB.
Despite a shift made voluntarily, Chakrabarty still gets a wee bit sentimental about his teaching days. “At 10pm, about 150 boys and girls came to the railway station with garlands to wish me well,” he recalls. “It was a golden period in my life. Still, I have no regrets today.”
In BoB, Chakrabarty quickly became a manager and then kept moving around—and up—in various departments, variously heading corporate planning, economic research, treasury and corporate risk management. A stint heading the bank’s information technology department, with its array of mainframe computers, opened Chakrabarty’s eyes to the possibilities that IT offered in terms of spreading banking, allowing him to start forming lasting ideas on what has now become a familiar refrain among politicians and bankers alike: “financial inclusion”.
“It is all possible with technology,” he says. “It is only technology that can provide services at a cost that is affordable to the poor. Otherwise, branch banking is unviable for most Indians.”
While he wasn’t very visible to anyone outside BoB, internally, Chakrabarty was building a reputation for his unwillingness to cut corners.
He still remembers a conversation with one chairman of the bank who bluntly told him: “You cannot be a GM in this bank” because he wanted “me to do something I wasn’t doing.” Chakrabarty remembers his exact reply: “Sir, I prefer to retire as a deputy GM. I don’t mind not becoming a GM but I am a poor person. I cannot afford to lose my job.”
“People can be temporarily unhappy with you,” he says. “Honesty, integrity, straightforwardness, devotion. These are good characteristics. The rest doesn’t matter. Nothing is free in this universe. You must be flexible but, if you seek favours, then you pay a price.”
While turning down a chance to study abroad eventually led him to banking, interestingly it was a foreign assignment that became a pivotal turning point in Chakrabarty’s career, helping him get noticed well beyond the offices of BoB. In 2001, Chakrabarty moved to London as head of what had been a perennial loss-making operation for the bank. What about that family bad luck? “I only went after both my parents had expired,” he says. “And my son was going with me, so there was no problem.”
London would also offer two lasting lessons to a banker who was starting to come into his own as a leader. Financial markets there opened his eyes to a “lesson on how an efficient banking system can work”, he says, adding that applying those lessons meant that in the three years he was there, the bank, which had never made money in London, showed a profit of Rs1.7 crore.
The second learning was a bit of a surprise for Chakrabarty, who had been very active in union activities during his early years at BoB. “If unions are strong, that is because managements are weak,” he says.
In London, Chakrabarty says he ran headlong into pent-up demands from employees as “a lot of promises were made before I got there”. Chakrabarty made one “take it or leave it” offer that was rejected by the employees there who then went on strike, little realizing that their new boss usually meant what he said. On the 11th day of the strike, Chakrabarty simply withdrew his offer, telling the striking workers they would have to come back with no conditions attached. “The strike lasted 16 days, but they came back on my terms,” he says. “What you require is transparency. Then you have no problems with anybody in the world, including any union.”
On his return, Chakrabarty was named executive director of PNB. “For 26 years, I had only thought of Bank of Baroda,” he says. “I have learned everything there. All of a sudden, it became a competitor bank.” It was another lesson learnt for Chakrabarty. “Don’t become too emotional and attached,” he advises. “Increasingly, even professional chief executives are staying for a long time. Now, if I work for one day, I think I am here forever.”
Words that could come very handy as, just eight months later, in the middle of an analysts meeting, Chakrabarty was told that he was being promoted to chairman and managing director of Chennai-based Indian Bank, an ailing bank in the home state of his boss, finance minister P. Chidambaram. “I answered all the analysts’ questions, completed the meeting, went to Siddhi Vinayak Temple and the next morning caught a flight,” says Chakrabarty.
In just two years at Indian Bank, Chakrabarty successfully tapped capital markets—the bank’s IPO was oversubscribed 32 times—after first convincing the government to help clean up its books. He left behind a solid financial platform for what has always been a bank that was much liked in the state, especially by farmers and self-help groups. While he jokes that he has been demoted from “an Indian bank to a Punjab bank”, Chakrabarty adds that “what I bring from Indian Bank is a strong experience in financial inclusion, in being a common man’s bank. Some of these can be replicated in Punjab National Bank”.
But is he just parroting what seems to be the political mantra these days in Delhi? Is the common man really profitable for PNB, which is trying to reduce its well-above-average bad loans portfolio?
“Let me be very clear,” says Chakrabarty. “It has been my experience in the last 29 years that the poor are more bankable; the poor are more credit worthy. In fact, had the poor not been so credit worthy, the rich class would not have been created in the society. People in India have become rich by lending money. Now, a banker is better than a moneylender because it is without the exploitation. Poor people will give you more margins. All over the world, large ticket, commercial lending is more loss-making. It is so in London, it is so in Mumbai and it is so in Delhi. How to make appropriate business models and replicate them is the real issue, not the poor.”
And this is where, Chakrabarty says, technology will come into play at PNB. While the bank had wanted to complete the full roll-out of its IT platform by 2010, Chakrabarty is already pushing for it to be done a year earlier.
“We bought IT but we have just brought the T (technology) and not the I (information),” he says. “Once you are able to do that, you can go very fast, add more customers, service the client better.
There are six lakh villages, so we will never be able to provide them regular banking. Internet banking is required by the poor, not the rich, because transaction costs are so much less.”
Even though he had been in the new job for about 14 days when we met, Chakrabarty has clearly set the tone. He has already asked that all problem loans over Rs1 crore be flagged to him right away and says the bank will arrest slippages in non-performing assets (NPAs), a key measure for banks.
“PNB’s NPA was one of the lowest,” he says. “My own assessment so far is that, maybe, for sometime the management focus hasn’t been there. We have a very good risk management system, but it is not monitored. That is an opportunity. If everything is good, then what can I prove?”
On the growth front, Chakrabarty says his short-term goal is that all branches must show minimum level of growth in deposits, “no individual branch should have less than 10-12% growth in deposits”, he says, up sharply from about an average of 5% in recent times. It is doable, he notes, because, of some 4,100 branches that PNB has, only about 30% are relatively underperforming.
Noting that 112-year-old PNB’s branch network and cash deposits are its strength, Chakrabarty notes that “serious competition has not entered the Hindi heartland where we have a strong base. That is why there is opportunity”.
Chakrabarty says he will also raise PNB’s profile, especially in terms of financial inclusion, and wants to focus a lot more on offerings such as educational loans though, he says, a fast roll-out of technology is key to jump-starting student loans.
Not a big believer in the popular management thinking of making a clear impact in the first 100 days, Chakrabarty says he is more keen on getting the right messages across.
In an organization of 15,000, to make impact in the first 100 days is “a little bit difficult”, he says. “But you must set the tone in the first 7-10 days, send strong signals on the way you will function, the way you will demand focus. You need to communicate that you will be demanding, but also let them know that, if they have any problem, that should be brought to your notice. A large number of people are motivated, but I am not getting results,” he says. “You have to demand performance. If you start demanding work, they will deliver. That has been my experience.”
A high profile role in New Delhi will also be a new test of Chakrabarty’s ability to work in close proximity with his political bosses. “In your official capacity, you must be politically neutral,” he says. “Otherwise you will be very unhappy in this job. In our political system, I follow the Scottish principle of banking: first, you say ‘No’. I got 20 telephone calls on my first day, about loans or transfers. But the first time you say no, the message goes down the line that ‘this fellow is useless,’” he adds, breaking into a hearty laugh before hopping into a Chevy Optra and heading home.
Curriculum Vitae
Name: Kamalesh Chandra Chakrabarty
Born: 27 June 1952
Education: MSc and PhD in statistics, both from Benaras Hindu University
Work profile: Chairman and managing director of Punjab National Bank. He has 29 years of experience in public sector banks, including Bank of Baroda and Indian Bank.
Interests: Rereading Peter Drucker. Currently on Managing in the Next Society
Admires: Indira Gandhi
Thinks Highly Of: Reserve Bank of India governor Y.V. Reddy (for his articulateness), finance minister P Chidambaram (for being a total professional) and ICICI Bank CEO K.V. Kamath (for a clear technology strategy in banking).
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First Published: Sat, Jul 21 2007. 12 11 AM IST