Excerpted from the book Reflections by Narayanan Vaghul, published by Piramal Enterprises.

In those days, all credit proposals had to be sanctioned by the Bank’s Credit Committee. The Committee would traditionally meet at 10 am on Monday mornings regardless of whether there was a proposal up for consideration or not.

Even though only the Credit Committee members were authorised to take the final decision, I threw open the meetings to anyone in the organisation who wanted to attend. This introduced a sense of transparency that the officers appreciated.

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I was particularly keen on new entrants attending the meetings so that they could learn how decisions were taken. On most Mondays, the meeting room was overcrowded, with many people standing and watching the proceedings.

One Monday morning, just as I was leaving for the meeting, my secretary informed me that a gentleman wanted to see me urgently. From the visiting card he handed me, I realised that the visitor’s proposal was up for consideration at that day’s meeting. I hesitated, but I nevertheless decided to meet him before I left for the meeting.

He entered and sat down stylishly and said that he had come to see me at the instance of Rajiv Gandhi, whom he had met the previous day. He stated that Gandhi had asked him to see me and explain the proposal to me personally.

He was a non-resident Indian, very flashily dressed, had a distinct accent, and had a condescending tone that seemed to imply that he sought credit from India and ICICI more as a favour to the country than to make money.

I found his manner of speaking rather distasteful but listened to him for a few minutes, before excusing myself saying that I was already late for the meeting.

When his proposal came up for consideration, it was also supported by a strong recommendation from the executives who had evaluated the proposal; however, I wanted to know if we had made any enquiries regarding the promoter. When the executive concerned explained that due enquiries had indeed been made and that the Bank was satisfied with his credentials, I interjected and said, “I am not.”

My senior colleague sitting next to me was surprised and said, “The proposal is adequately secured, and I do not see what can go wrong. The contract is with a public-sector corporation and there is an assured payment to the Bank. I do not know why you are objecting to this proposal.”

I did not want to tell them that my objection was based on instinct rather than logic. To say that I did not favour a proposal because I did not like the way the promoter talked would subject me to ridicule. After hesitation for a while, I decided to go along with it and the proposal was approved.

Things did go wrong. What seemed to be a sound proposal soon fell apart thanks to the promoter’s mismanagement and indifference, and the security that the Bank had thought was quite safe and would cover our loan disappeared. I do not want to go into the sordid details except to say that we lost all our precious money.

To add salt to our wounds, the person came back and wanted a further sum of money from the Bank to rescue the security. Understandably, bank officers responded to this proposal with derision and rejected it. The Bank was not prepared to lose any more money in the slim hope of recovering the outstanding dues, which we concluded were lost to us in any case.

At this time, there was a change in Government and a new Finance Minister took over. The day after the cabinet was sworn in, I got a call from the Minister’s office saying that he wanted to see me. I deluded myself into thinking that he might have wanted to discuss measures to improve the economy, which was then in dire straits.

The Finance Minister started his conversation somewhat sternly, “I wanted to see you in connection with this case. Even as an MP I was following this case and was appalled by the way you have treated this client.”

The Finance Secretary then joined the meeting along with the Additional Secretary of the Department of Banking. I tried my best to explain to the Finance Minister that it would be difficult for the bank to give the borrower further loans and listed his various known malpractices.

The Minister shot back, “I have gone through the case in great detail. I suggest that you give him the money he wants. I assure you that the loan will be fully recovered.”

Before I could argue further, the Finance Secretary interjected and said, “Mr Minister, Vaghul is the Chairman of the Bank and it is for him to decide what is best in the Bank’s interest. We should leave it to him.” The Minister glared at me and turned to the Additional Secretary, saying, “I want you to follow up on this case.”

I was quite rattled when I left the meeting. As soon as I reached my office in Delhi, I got a call from the Additional Secretary asking me to meet him at his office.

When I arrived there, I found that the borrower and a gentleman who appeared to be an intermediary were also present; I was later told that the intermediary was the Finance Minister’s brother, but I had no way to verify this.

Both the borrower and the intermediary started pressuring me to approve the loan, with the Additional Secretary strongly supporting the move. To make matters worse, the Additional Secretary repeatedly questioned me on how the bank had allowed the security to slip out of its hand.

Annoyed at being treated as the accused, subject to questioning by three people who were determined to make me do things that I did not want, I turned to the Additional Secretary and said, “Can we step out for a while? I want to speak to you alone.”

When we got out of the room, I told him, plainly, “I do not like what is going on. If you subject me to this pressure any longer, I will walk out of this room and call a meeting with my Board to submit my resignation and give them the reasons for doing so. I will also issue a press statement giving the reasons for my resignation.”

The flustered Additional Secretary immediately became apologetic. He said, “No, no, no. Please do not do anything like that. I had to intervene only because the Finance Minister wanted me to do so. Please return to the room and explain how things stand to the borrower. I will not say anything.”

I told him that I had no intention of returning to the room and started walking towards the lift. The Additional Secretary accompanied me to the lift, a rare gesture by a bureaucrat, and I returned to my office.

Subsequently, the borrower carried on a calumnious campaign against me in the press. Fortunately, we were able to adequately explain our actions and the matter soon died down. The borrower, however, did not give up his intention to serve the country; he decided to stand for elections, in which he lost his deposit.

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