[Reader-list] Laughing all the way to the bank!!??

[faraaz mehmood]

Not so long ago banks provided a predictable ambience
of rigid procedures pursued by men & women dressed
conservatively working according to a set of rules.
The day’s business was receipts, deposits &
withdrawals with a few loan seekers quietly pursuing
their case with an apologetic air, pushing a sheaf of
papers towards sympathetic bank employees. Not so if
you would have visited my bank last week. I am not
talking about a case in isolation. It happens in every
private or public sector bank across the city. The
banking sector is constantly climbing up the
commercial ladder to grab more & more opportunities
for accumulating profits to fatten their bottom line.
All these have become legitimate banking activities &
is called selling Third Party Products (TPP) such as
mutual funds, insurance, railway & air tickets, income
tax payments etc. there is one more sphere which
brings hordes of citizens gate crashing in the bank.
Last week my bank sponsored the Initial Public
Offering (IPO) of stocks of speed airways & national
Bijlee Corporation.  									The IPO rigmarole lasted
for five days. Daily we were mobbed by hundreds of
stock aspirants. To broaden the sphere of banking
activities my bank like every other one played sponsor
to IPO’s time & again. Previously when a corporate
unit offered stocks as initial public offering by
pricing each stock with a fixed amount say 10 or 20
rupees & putting a premium on it of say 100 or 115
percent. At the end of the expiry date the company
allotted the stocks in a random fashion due to almost
every IPO getting hugely over-subscribed. The IPO
scenario has drastically changed due to lightning
activity on the commercial street. These days the
company offering the IPO does it within the confines
of a price band. Like the speed airways offered IPO in
the price band of 925-1125 rs. This is where the banks
stepped in. My bank as the sponsor of this IPO went on
a sales blitzkrieg putting up advertisements on the
local Tv channel, newspapers, banners on crossroads &
posters on the walls. My bank offered to loan half the
money of the investment the stock aspirant had decided
to make. If the stock aspirant had approached the bank
for the first time then he had to pay an amount of Rs.
620 & if it was his repeat dealing then he had to pay
Rs. 270. He was also obliged to pay 16% on the money
he had borrowed. Most of the stock seekers aim to
quote the maximum amount at the price band. Hence they
need money with easy access & which could be repaid on
the non-allotment of the stocks. 														   The
hidden costs did the trick. My bank was aiming to lend
Rs. One crore for the two above-mentioned IPO’s. We
ended up distributing Rs. Four crores in five days.
People were coming laughing all the way to the bank.
The bank bosses were the really gleeful albeit in a
suppressed manner. The bank had successfully made a
sharp dent into the conservative mannerisms of an
orthodox small town like Udaipur. The publicity
onslaught had converted the cautious mewari to make
bold strikes in easy money zones. The average citizen
did not read the fine print nor he realised that his
individual contribution made up a substantial profit
for the bank when calculated collectively across the
country. 								The loan application was a mammoth
document comprising 32 pages with the requirement of
34 signatures of the loan seeker. With throngs of
people deluging the bank premises in a space of few
days it was next to impossible for the loan seeker to
read the form & the bank employee to explain the
conditions. My bank hired 7 management students from
the local management college who were given a model
copy for taking 34 signatures on the form on
appropriate places. Later on these guys working from
early morning to mid night filled the forms according
to the no. of shares applied for in return they were
graciously awarded certificates of dedicated work by
the branch head. 							The LAS form, which is Loan
against Securities, mentioned in detail the
prerogatives of the bank irrespective of the allotment
of shares. Apart from the amount of Rs. 620 or 270
according to the nature of dealing the customer was
obliged to open a demat a/c with the bank where his
shares get lodged in case of allotment. The bank would
not allow the customer to sell these shares unless the
amount of loan has been repaid. The bank took other
safeguard too like the allotted shares were lien
marked & prohibited from resale without the approval
of the bank. The bank was supposed to sanction loan
only after evaluating the financial viability of the
customer but the glare of profits blinded the bank
into offering exactly the same amount of money
mentioned in the cheque by the loan applicant. What
was required was a valid cheque & 34 signatures on a
form comprising of 32 pages. The illusion was a
win-win situation for both the customer & the bank.
The somewhat different reality was the hearty laugh
echoed in the bank.       
And aside…
       	While all the loan allottees were wearing a
huge grin on their faces, a sideshow with some mirth
was going on in the wings. My immediate boss assistant
manager priti mehta could hook a decent guy in dubai
as her fiancee. The guy a chartered accountant had a
huge stock of one liners which he traded on the e-mail
several times a day. Priti could not afford to slacken
in this race of wits as the engagement was only
recent. In between doling out loans in thousands priti
kept up the prattle of love talk punctuated with “what
say? & Up next” among harmless innuendoes all with the
active help of (sincerely yours). Near midnight I
buzzed the signing of tune ttyt or talk to you
tomorrow.  More in next postings
Fm


		
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