From a clerk to becoming a probationary officer and then rising to a corporate general manager in a nationalized bank, Samir Baruah’s life has been a chequered and a challenging one. Proving that age is no barrier, he got his Phd at the age of 68. He has always believed that a bank manager can ‘Make a Cobbler into a BATA and an Auto operator into a TATA’. Talking to Business Northeast on a variety of issues in the banking sector, Samir Baruah (70) who retired as a corporate general manager with Indian Overseas Bank said banks will have to shed inhibition and pro-actively come forward in increasing their flow of credit in North East India.
1. You have had a long career in banking. What has changed for the bank customer when you joined in and now?
Yes, I had a long career spread over 40 years working almost throughout the country with overseas exposure. As a banker I realised at a very early stage of my career, that it is a unique service, where, in the course of a day, the bank manager could wear several hats depending upon the type of customers he/she is funding and dealing with. My often repeated ‘own’ quote is; if a bank manager wants, he/she can ‘Make a Cobbler into a BATA and an Auto operator into a TATA’.
Banking and customer expectations have undergone a sea change in India during the last 50 years. I had joined at a time when the banking industry was on a transition from ‘class’ banking to ‘mass’ banking following the nationalisation of 14 private sector banks in the country. Banks in India were also entrusted with ‘social’ banking responsibilities. The priority at that time was to mobilise deposits from the Public. The challenge was to educate and make the customers aware about the banking services as majority of the customers were new to banking.
The greatest change that is taking place is the gradual transformation of brick and mortar banking to virtual banking.
Today’s customers are well informed. Information Technology revolution is doing wonders in making available all information regarding banking services and products through the bank websites.
2. What are some of your memorable experiences as a banker which you can share with our readers?
I have had lot of memorable experiences in my long 40 years of banking career serving almost throughout the country with some overseas exposure. I am sharing two experiences, one at the beginning of my career and the other almost at the end of my career.
To begin with, I am indebted to late Bhabani Charan Sarma the Regional Manager of United Bank of India North East India, who had in course of an in-house meeting of the bank had addressed the staff and in course of the lecture made a statement that ‘If you want to be a successful banker than you should be able to satisfy a customer even by saying No’. This profound statement went deep inside me and it became a ‘mantra’ for me which I religiously followed throughout my career.
1st memorable experience:
In early 1980, by default, I was posted as a first time Branch Manager of Indian Overseas Bank Shillong Branch when our earlier branch manager had to leave in view of some civil riots in Shillong. I was very young and had only one year experience as a confirmed officer. Generally senior managers are posted as Branch Managers of Capital City main branch. I was ordered to proceed from Gauhati where I was the second line manager. It was the only Branch of the Bank in Meghalaya and so I took it upon myself that my area of operation is the entire State. I was very eager to help the local people of Meghalaya. I went and met the Director Social Welfare Meghalaya and offered our banking service to the Government. He directed me to meet the Superintendent of a Vocational Training Institute located near the Pine Mount School in the heart of Shillong city. I went and met the Superintendent Mrs Lyngdoh, a very graceful lady, who received me at her office in the institute. She took me around the institute and I saw about 100 ladies undergoing training in handlooms, knitting, tailoring, embroidery etc. I was very impressed seeing the ladies seriously engaged in getting themselves trained. When we came back to her chamber, I could observe a gloom on the face of the Superintendent. She narrated that the banks are not coming forward to help the trainees in setting up and running of their enterprises. After making necessary enquiries about their antecedents and on the recommendation of the Institute I took a, on the spot in-principle decision and announced that we will fund all of them on merit and that they should get their documentation formalities completed. I was not knowing that this small gesture on our part could evoke so much of good response and we were highly appreciated by the Government.
2nd memorable experience
My other memorable experience, after a very long successful banking operation tenure in almost all parts of the country was, when I joined the Staff College of Indian Overseas Bank in Chennai as the Principal. I proposed conducting of a study by the Faculty as a project on understanding of the various issues and challenges being faced by a rural bank branch on rural development and also study on the issues and challenges before the villagers
We visited a rural bank branch of Indian Overseas Bank Nazarethpet Branch, located some 60 KM away from Chennai which had to service 20 villages. We conducted a survey of the villages with the help of large number of students of a reputed Management Institute in a win-win situation both for the students and us. Our findings revealed that there were issues and challenges being faced by both the bank branch with lesser man power and infrastructure and the Villagers looking for financial support from the bank branch for their livelihood. We took it upon ourselves to become the facilitator and funding agency and to look for organisations and corporate who could leverage their core competencies in a win-win situation with a collaborative effort.
We were very fortunate to have come across a hugely committed resource person in the form of a scientist who had left his scientific research work job and returned to his poverty stricken, drug and alcohol affected village and with great difficulty re-entered his village and after having gained the confidence of the villagers. He finally built a panchayat academy in the midst of these 20 villages to educate and make the panchayat members aware about their rights and responsibilities. We could in collaboration take forward his idea of Network Village Economy/Growth in those 20 villages where a ‘connect’ was developed between the producers and consumers. The produce of these 20 villages were consumed in these 20 villages and the surplus went out of these twenty villages thus adding to the ‘Wealth’ of these 20 villages. This caught the attention of former President Late Dr Abdul Kalam Azad who informed Rangasamy Elango of his desire to hoist the traditional white flag of Tamil Nadu to signal the self-reliant economy of the villages. I spoke to Elango who said he is receiving good support from the bank and expressed his desire to visit Assam.
Generally a Staff College of a Bank imparts training on domain and soft skills etc and faculty carries out routine mundane activity in taking classes. This was an instance where the Principal of a Staff College could inspire the members of the Faculty to go beyond routine in undertaking a study on how a rural bank branch with lesser manpower and lesser infrastructure, could succeed through a collaborative effort.
3. The common grievance of the customer when he walks to the bank is not getting a loan. Where is the malaise actually?
There are two issues in broad terms:
4. Digital technology has played a crucial role in changing the face of the banking industry. How do you see it and what more can the technology do to make it easy for the common man?
Having opened up the economy in the 1990’s followed by the financial sector reforms like the Income recognition and asset classification norms etc Technological interventions on proper compliance of regulations, tracking, monitoring and to carry forward the out-reach programs of the banks in reaching out to the bottom of the pyramid, technology has a huge role to play in formalising services. To this extent technology as an enabler is welcome. However, India as a Labour-intensive country with 65% youths and median age of 29, we must gainfully engage/employ our Youths and not depend too much on technology lest it may lead to ‘job-less’ growth, which can be a disaster for the country. There must be a balance between use of Technology and providing of Employment to our qualified able-bodied youths.
5. One of the biggest problems in the banking sector in the Northeast is the low credit-deposit ratio which has been going on for a long time. What according is the malaise and how can it be rectified?
I had post retirement gone into my PhD research study on this subject. I investigated into the low Credit-Deposit ratio of banks. It is a question of demand for and supply of Credit.
The bankers are of the general opinion that the credit absorption capacity of Assam and for that matter in North East is low. This means they are of the opinion that the demand for credit is low. There is huge demand for credit in North East India. In the virtual absence of investments flowing in to the desirable extent, the banking industry more so in the micro and small sector with enough of liquidity has a huge role to play.
There are supply side deliverable issues including un-founded fear of loans turning out to become Non-Performing Assets and related accountability issues etc. There is visible credit aversion and risk aversion tendency on the part of Bank Managers which the banks will have to address and ensure larger flow of Bank Credit in the North East. There are visible gaps between Loan Policy’s formulated by the Top Management of Banks and the loan Practices adopted at the bank’s operating branch level. There is also apparent gap between the Reserve Bank of India directives relating to priority sector loans and the practices adopted by the bank Branches. Seemingly the RBI stopping the inspection of bank branches at random to cross check on violations if any, may have reduced the fear on the consequences in violation of Reserve Bank of India directives. Reserve Bank of India may have to review their policy on inspection for the North East Indian States and start at least some random inspection of Commercial Bank Branches.
Banks will have to shed inhibition and pro-actively come forward in increasing their flow of credit in North East India.
6. Does the Northeast require a separate banking policy as the problems facing the industry here are quite different?
There is need for reviewing the Loan Policy’s for the North East with special focus on the inventory norms in financing the working capital requirement of Industries. There is need for a bottoms-up approach on customization of loan products in conformity with the needs and requirements of North East. North East is a miniature India with lot of diversity and as Banking is both theory and Practice, there are lot of practices which are bankable but may not fit in to the standardized Loan Schemes and Products.
7. The microfinance sector has made an impact in the region. How do you see its work in the Northeast?
In North East India under the MSME (Micro Small and Medium) Sector, the distribution of the Micro sector is almost 99% and out of which, very surprisingly 90% are remaining in the un-organised or Informal Sector. They therefore are as such not able to raise finance from the organised Banking Industry. They continue to remain at the ‘subsistence’ level and are not able to scale up their business operations. There are millions of such skilled people engaged as craftsmen, artisans, weavers, goldsmiths, cobblers etc in North East India, running tiny units at the khadi & village level, cottage industries level, who are still remaining under the clutches of the indigenous money lenders charging exorbitant interest. The Micro Finance Institutions under this context has made a significant contribution.
It would be better to critically examine the reasons for the micro sector remaining in the un-organised sector and whether there is need for either having a separate legislation for the Micro Sector or simplifying the regulations for compliance by the micro enterprises.
8. One of the biggest problems of entrepreneurs in this region is the lack of working capital. What are some ways how it can be addressed?
Capital remains a big problem for our entrepreneurs and industrialists. Access to Finance is a huge issue. Commercial Banks as short-term lending Institutions have to necessarily fund the working capital Gap. The entire credit appraisal mechanism of the banks they take into account 25% of the projected turnover for determining the quantum of lending. Generally for any Project the ‘means of finance’ to meet the ‘cost of the project’ is very important. Under means of Finance there is an important component which is ‘unsecured loans from friends and relatives’ which is a low-cost fund. It is observed that in North East despite our having large number of High-Net-worth Individuals(HNIs), the risk-appetite of such HNIs is less. Consequent to that the availability of such low-cost funds is lacking. This is a major reason for our entrepreneurs, more so, in the MSME sector requiring to depend on the commercial banks for larger share of working capital funds. We need to create much more awareness about the financial markets in our High-Net-Worth Individuals and we must collectively succeed in creating a congenial investment climate like in States like Gujarat etc. Our entrepreneurs must be able to hone up their skills and must be able to foresee opportunities and seize such opportunities.
9. What kind of qualities should an ideal bank manager have?
According to me, an ideal bank manager must have the following attributes ASK ABC
Branch Manager must realize that they are essentially financial doctor. Like a doctor they must also have to give a patient hearing to what the customer has to say, more so, for such customers who come to the bank looking for financial assistance. They must be aware that under imperfect conditions they cannot expect to get perfect proposals. It is for them to educate the customers and without violation of the directives issued by the top management, they must be able ‘deviate’ depending upon the merit of individual cases, in terms of the deviation policy framed by respective banks.
10. Do you think banking is still a very good career for young people as there are other career options? If so, why?
According to me there is no other career like the banking career. Banking will always remain in great demand. It provides scope for career progression and fast track promotions depending on individual performance. With banking Industry foraying into various sectors, it is opening up huge opportunities.
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