TAMAL  BANDYOPADHYAY

                                                 

From Lehman to Demonetization by Tamal Bandyopadhyay ; Published by Penguin/ Random House India; Price Rs 599/-; Pages 376.

                                               *************************

Tamal Bandyopadhyay is  Consulting Editor of  the daily   “Mint". He is the author of  three books  “ Bandhan: The Making of a Bank”, “Sahara: The Untold Story” and “A Bank for the Buck.” He was adviser to Bandhan Bank Ltd ---a micro-finance company that was converted  into a bank. He ran a 32 episode series on Bloomberg India TV, called Banker's Trust, where senior central bankers, commercial bankers and economists were interviewed every week.

 The book under review is a graphic  story of banking in India in the last decade and covers a wide range of topics that span the current history of Indian Financial Services. It is a chronicle of the tumultuous decade from the collapse of Lehman Brothers to Demonetization. Tamal has dealt with  public sector institutions, bad loans, the link between policy makers in Government and the Regulators. The decade saw the resurgence of non-banking financial companies and the RBI  accepting the ritual of flexible inflation targeting. The essays in the book are extremely well thought out and well written which makes for engrossing  reading.These essays appeared in “Mint” and Tamal has hand-picked them from a total of 600 pieces that he had published

The second part of the book incorporates   interviews with the  “Who's Who of Indian Financial Sector”  -- fifteen personalities who have played a seminal role in shaping the decade. They are regulators, professionals and entrepreneurs.

Tamal  has kept a close watch of the financial sector for close to two decades and has had a ringside view of the enormous changes in Indian finance and banking sector over the period. 

Tamal  raises some relevant questions: Has the RBI cracked the Da Vinci Code of Indian banking? Can we get businessman Vijay Mallya back from London to pay his dues? What is the conflict between the RBI and the finance ministry?. Why do we need reforms in government-owned banks? Did we need the Bharatiya Mahila Bank? Or, a paper tiger called Banks Board Bureau? Is demonetization a boon or bane?

To get a feel of the book we are giving excerpts from the book.

                                              ********************This is a story of a young financial-sector professional who rode on the economic boom of the past few years, but lost his job when the wave of the global credit crunch hit India after the collapse of the Wall Street investment bank Lehman Brothers. The young MBA changed three jobs in the past four years and his annual salary rose from Rs 60,000 to Rs 550,000 by hawking loans to small and medium entrepreneurs and mortgages. After he joined a large non-banking finance company (NBFC) with footprints across India, he got a hefty bonus for the year ending March 2008. But the good time did not last long. The cracks started showing from January itself, with borrowers diverting money into the stock market and instances of rising defaults. The NBFC, with its headquarters in Mumbai, chose to look the other way till the liquidity crunch hit it hard. By end-September, the company started asking people to resign. He was the last person of his thirty-member team to be asked to go.

                                                   *********************

 When Raghuram Rajan came to India as the Government’s Chief Economic Adviser two years ago, everyone warned him about the bureaucracy. “People told me the bureaucracy here will be very difficult to deal with—very smart people, but with very different agendas.”

Rajan  has his own  style of policymaking. One way to do things is to say let us think in theory, develop the best plan possible and then implement in one go. I call this the Brahminical way. But this may not work at the implementation stage as you will realise, that some aspects were not considered. The alternative is, roll up the sleeves, don’t minimise the thinking phase, but do it quickly. I am trying to do that.

 Tamal  asked him bluntly whether he offered to resign when the Bharatiya Janata Party-led National Democratic Alliance government took over in May. After all, he was appointed by the Congress-led United Progressive Alliance Government. Rajan doesn’t seem annoyed, but prefers not to answer this question, even off the record. He says curtly :Of course, if I lost the confidence of the Government at any point, I would go the next day.

 In August last year, the UPA government announced the name of the next RBI Governor a month before the position fell vacant, and Rajan, then Chief Economic Adviser, was sent to the RBI as an Officer on Special Duty—something that had never happened in the RBI’s seventy-nine-year history.

 One year on, the rupee has stabilised, the current account deficit is manageable. Rajan is not shy of raising policy rates to fight inflation and, most importantly, the Government is backing him to the hilt in his fight against inflation.

                                      ****************************

An important part of the book is an account of the first-hand experience of a Branch Manager during the days following Modi’s announcement of Demonetization on November 8, 2016. For the next fifty days till the exercise ended on 30 December, the Branch Manager had to occasionally sleep at the branch . He had to make sure that every customer was taken care of and that the bank could use the opportunity for generating low-cost current and savings accounts. On top of that, he needed to be on his toes so that none of his colleagues were used for money laundering.

He is one of the 1,30,000-odd branch managers of banks in India.

We needed to keep a hawk-eye on every transaction to catch dubious  people. After every hour, we were taking a five-minute break to tally the transactions. One day, a man walked in with a suitcase carrying Rs 8.5 million. He was a customer of our bank, but not our branch. I decided to connect him with the Vadodara branch manager where he claimed to have his account. I don’t know what they discussed over the phone, but I found him leaving my branch with his suitcase after talking to my counterpart.

Many of us spent our Sundays too in the branch as on weekdays we could do nothing but handle the cash; there was no time to do other routine work such as maintenance of records and, of course, sanction and disbursement of loans.

 The continuous changes in the regulator’s directives also complicated our job.

The toughest part of the entire exercise was to keep the morale of my colleagues high. There were days when we couldn’t have a proper meal. I lost 10 kg in these two months; got a few strands of grey hair.

                                           *********************

Reading this book one can only agree with what P Chidambaram said, "In a period of great financial illiteracy, it's refreshing to have a book written by somebody very literate about matters relating to finance".

P.P.Ramachandran.

10/12/2017