What happens when a bank tries too hard to cut the slack ?

How many zeros are there in 550 crores ? It takes you a while to count, doesn't it? But Bank of Baroda, without any hesitations, put a lien on a security guard's and a regular farmer's, along with 3 other people's bank accounts in order to recover a Rs. 550 crore loan given to Vijay Mallya. Sounds hard to believe but as a matter of fact, Bank of Baroda is ready to call it a technical error, a technical error repeated 5 times in a row.

Arun Jaitley, Finance Minister of India, with heads of all the private sector banks of the country held an annual review meeting on 6 May to discuss the "commercially prudent" settlements that banks are getting into in order to clear of bad loans. PSUs have run up more than 4 Lakh crore of NPAs ( non-performing assets)  which itself is a crying citation of the fact that banks have been playing the role of being  “commercially prudent” in lending loans to big corporate  better than ever seen before. Bank of Baroda, for example, tops the list of most “commercially prudent” bank for now.

The recent show of diligence by BoB shows the bank freezing the accounts of Manmohan Singh, a lowly farmer from Uttar Pradesh, with a savings of only Rs 1,277 at the Nand, Pilibhit branch of the bank, for being a “guarantor” for Vijay Mallya’s loan. This case was dismissed as a technical error by the bank but after committing the same technical mistakes, it seemed fair to extend the finance minster’s offer of constitutional protection for banks from “constitutional prudent” settlements.

 It all started when back in the day, when it became exceedingly clear that Vijay Mallya was unwilling to pay up the Rs 9,000 crore he owed to a consortium of 17 banks, led by the State Bank of India, Bank of Baroda on being the loaner of Rs 550 crore circulated a list with 9 names, including Vijay Mallya and three of his kins and 5 other officials of Kingfisher Airlines and directed various branches across India to put a lien on their accounts.

On freezing Manmohan Singh’s account  assuming he was Manmohan Singh Kapur, an independent director of Kingfisher Airlines board, Bob explained the mix up by quoting, “The accounts under reference were strayed off to mark lien by the bank, owing to similarity of name and few credentials with the guarantors of Kingfisher Airlines. However, on realizing this, the bank took immediate action to reverse the lien on these accounts and funds were made available to the customer immediately.”  

It became inappropriately impossible for Bob to cut the slack when it repeated the same mistake with Subhash R Gupte’s account. Subhash R Gupte was till recently on the board of Kingfisher Airlines  until he resigned from the airline board on 2 April, 2014. Considered a guarantor to the loan according to the bank, his account was muddled up with the account of Subhash R Gupta,24- who has been living in a Slum Redevelopment Authority building in Vile Parle East, Mumbai and earns a living as a security guard at Kandivali facility. His savings account contained a mere two digit balance amount, yes, two digit balance amount. The total amount of Rs 93, that Subhash R Gupta’s account contained was frozen in order to retrieve a loan of Rs 550 crore. His living itself suggests his lack of capacity or the audacity to stand guarantee for a loan of Rs. 550 crore to Vijay Mallya.

Here is the document circulated by Bank of Baroda showing all the names of the people whose accounts were  to be marked lien:

On further digging, even after the bank denying the confusion as well as the details of the accounted, it was found out that Subhash Gupta has opened the account in August 2014 to avail of the insurance scheme under the Pradhan Mantri Suraksha Bima Yojana and was not informed by the bank about the lien order on his account. Not so surprisingly, he had no idea who in the heavens was Vijay Mallya.

This only tells the mystery of one Subhash R Gupta out of the 4 mentioned in the list circulated by the bank. On questioning the bank’s Khar branch where the rest of the three Subhash R Gupta’s accounts were frozen, we were told that all the three accounts were held by three different persons and not one individual.

Can this misunderstanding be let gone as a regular technical error? What does this say about the credibility of banks to it’s associates?  Do common people have to pay the price for important people’s misdoings? 

 

Beeba M Singh