Business Strategy & Policy: My Unfolding Voyage 62

The association with the work relating to the director's report increasingly gave me the impression that the Bank really had not even an implicit long-term vision or goal that would explain the rationale of its management. The top management were more interested and focussed on how to please the sole owner, the Government of India, in particular, the State Minister of Finance for Banking and the Additional Sectretary Banking, especially in meeting targets of performane in relation to priority sector fiance, branch expansion and the like. There was not even a desire to be a much larger bank than the close competitors. At that time, the top most banks in terms of business were the State Bank of India, Central Bank of India, Punjab National Bank, Bank of India and Bank of Baroda, followed by United Commercial Bank and the United Bank of India. Canara Bank and Syndicate Bank ranked further down the ranking table. United Bank of India top management seemed to be satisfied with their rank and felt better if the Bank could just beat the United Commercial Bank in terms of depoits level: they would not envision a future of the Bank being among the top three banks in the country: for the owners of the nationalised banks, it did not matter which bank had achieved whuch size so long as all the banks were growing every year at a reasonably fast pace to bring more resourses under the control and direction of the Government.


The lack of an explicit or implicit (underlying) long-term vision got reflected in the absence of long-term strategies and plans and focus on the immidiate future: as one Chairman of the Bank had indicated that his horizon of planning for the Bank was limited by his remaining two years or so to retirement - the owners would not appoint a Chairman who was relatively young, nor would allow even a successful Chairman to continue after the Government stipulated retirement age of 58 or 60 years. The Syndicate and Canara Bank Chairmen had been slightly younger when they were appointd and could envision for a longer period: they would soon come up the ranking table, leaving United Bank of India behind.


Business analysis and policy work in the Bank therefore was focussed on immediate requirements of changes in methods and systems, recruitment and training and deployment of staff to achive the targets set by the owners, rather than on career planning, radical reorientation in organisation structure, diversification outside the contours of the Government policy, innovation and enterprise. One knew that one's growth opportunity in the Bank would be decided by how fast the Bank is able to grow rather than by the challanges taken up to transform the Bank to realize a clearly articulate long-term vision.


Business policy making therefore was more a convenience of prevailing environment rather than part of a long-term strategy. Maybe two illustrations would make it easier to explain this personal observation. The Bank could not have made any serious effort to improve customer service: while most of individual employees were sincere and could operate on higher productivity, the left-wing politician influenced trade unions (one for class III and another for class IV employees) would not allow higher productivity any where and assured the empployees of negotiating progressively higher wages for progressively lower work effort and greater leisure time at office. Personnel management was weak and compromising in the face of Marxists (do not produce surplus value for the owners and customers to appropriate large surplus value). The Bank would further abandon nursing an idea of dealing with the employee trade unions after nationalisation because the ruling political party would not like bank employees to go on various forms of strikes.


Yet, when the ruling political party desired, after the declaration of Emergency by the then Prime Minister Mrs. Indira Gandhi, the Bank would immediately initiate steps to improve customer service. One such step was to assign each officer in the headquarters to visit two branch offices and report on their standards of customer service to the top management at the headquarters. I had chosen two branches: one close to my residence and the other close to my office. I had convinced the bosses that instead of wasting time on week days, I would visit each branch on one Saturdays every month. The bosses readily agreed because that would ensure my availabilty at the office forw regular work
on all working days except the two saturdays - half-a-day working hours on Saturdays for banks. I had worked out my own inspection visit plans: check attendance register just after the branch opened in the morning, record time taken to serve customers withdrawing deposits or depositing cash/ cheques in their account, just by observing a sample of customers movement from thei entry to the branch and noting also the time one has to wait in the queue, would have a brief inspection of certain books of accounts and share a cup of tea with the branch manager discussing with him about his plans and progress in regard to customer service, and then write out my report there itself - all within a space of 150 minutes. Then I would quietly, slip out of the branch, meet my wife who would come over from our home, share some food in a restaurant and enter the theatre nearby for a matinee show. There were no bosses around to interfere in the name of exigencies of sudden urgent workflow: I got my compensation for those few days the bosses made me fail my appointments with my fiance. On one occasion, we went to see the Zeenat Aman starrer Satyam, Sivam, Sundraram but could not get the tickets and went to see another Satrughna Sinha Hindi film in the theatre close by. The power supply failed in the theatre after thec film had progressed past the mid-way: so, we collected the money refunded by the theatre hall, proceede quickly back to the theatre showing Satyam, Sivam, Sundaram to find the next show about to start had no seats available when someone came to us offered to re-sell two tickets as their friend had not turned up to see the movie. That day we enjoyed one and a half fim shows at the cost of one film viweing fees.


The customer service visits went on for about four months and customer service fell back to the levels that the employee unions were happy with: what happened to our reports, we could not get any feedback.


Being an instrument of the State policy, the politicians would not allow banks to be involved in anything that would come under criticism for hurting the common citizens. Potato prices rose sharply one particular year and there was a view commonly held by political parties that this has happend because of cornering potatos housed in cold starages by profiteering traders. Naturally, the board members, especially the representatives of the Government desired an anaysis of the policy of the Bank in respect of financing cold storages. I was instructed to make a survey based study on the extent and impact of the Bank's financing of cold storages. A very friendly credit officer in the tradional large advaces department took me around several bank-financed cold storages in the major potato grwoing belts in Hoogly and nearby districts or rural Bengal for three days. We had nice night-stay arrangements awaiting for us to make us comfortable. We moved in a robust Ambassador car from cold storage to cold storage. The cold storage managers/ owners explained the methods of operation with special reference to their customers who stored potatos in their storages and the period of inflow into the cold storage, the period of complete air-conditioning without any inflow or outflow of potatoes and then the period of withdrwal of potatos in phases from the cold storages. I also had discussion with the nearby branch managers who explained the method of financing of potato growers from the stage of seeding through selling of a part of the crop yield, storing in their cottages a part of the yield for sale over the next two - three months and putting the remaining part of the produce in the cold storage for selling at higher prices after four-five months.


The basic economics was simple but politicians, common people and the educated elite seldom apply their logical mind if prices go up sharply for an essential food item. Bank financing of cold storages had nothing to with the rise in prices of potatos during September- October period: rather, in the absence of the cold storages prices would have been far higher than they would otherwise be during September to early January when the new crop is harvested. Pointing all these out in my Note to the Board, I showed how financing the cold storages the Bank had helped moderate the sharp rise in the potato prices after three months' of harvesting the crop output, reduced the incidence of rotten potatos in farmers' household storages, increased the production of potatos and increased the income of the potato growers. I also pointed out that the occasional sharp rises in the price of potatos during September-November was partly due to sharp rise in demand due to succession of festivities and partly due to manipulation by certain potato wholesale traders in Kolkata with part-ownership of some coldstorages who would buy from the farmers holding stocks in the cold storages to gain control over stocks. My  recommendation was to increase bank financing for new cold storages and for financing farmers growing potatos so as to both increase the overall availabilty and make the wholesale trade in potato more competitive and contestable. The Bank's directors felt comfortable that the Bank would be able to convince the politicians that bank financing of cold storages was not the reason for rise in potato price. It is another mater, that during the last three and a half decade period since then, the same problem of sharp rise in potato prices would recur in certain years at times of high seasonal demand surge: a few big wholesale traders would continue to be successful in ensuring effective barriers to entry of new wholesalers in potato as in the case of fish and the political parties would find existence of  such oligopolies helpful to them. If public sector banks were really to be used as instruments of State policy, the structure of wholsale trade could have been made substantially more competitive and contestable. United Bank of India on its part could not envision how it could grow it business in poptato cultivation, storage and trade.