Banking. How individuals shape institutions

Unique among developing countries, India has thrived as a democracy with a continuous track-record of openness, transparency, equal rights and Constitutionally established principles of governance.

Apart from the aberration of the Emergency years, our nation has developed as a democracy due to the strength, resilience, value-systems and independence of its institutions too.

In the financial sector, SBI — one of India’s most respected institutions — has reflected values and ethics which would probably be evaluated and appreciated better only through the perspective of history. State Bank has had an array of individuals at the top who have remained uncompromised in core values which is what sustains this national icon. SBI bosses of both the past and the present are hugely respected in their field for both their knowledge and adherence to certain principles.

But no SBI boss is as legendary as RK Talwar, who became its Chairman at age 47, in 1969. He dominated the Indian banking scene for close to two decades in the Sixties and up to the mid-Seventies, being also the first career banker from SBI to head the institution.

He joined the Imperial Bank of India, the forerunner to SBI, in 1943 as a Probationary Assistant (Officer) soon after his post graduate degree in Mathematics from Lahore University.

As Chairman, Talwar pioneered simplification of procedures for financing of small-scale industries and launched new schemes for the benefit of smaller entrepreneurs, small businessmen and agriculturists. He also put in place systems to ensure comprehensive analysis of corporate balance sheets much before the Reserve Bank prescribed norms for credit analysis of large advances. It was again his foresight that initiated the first-ever organisational restructuring exercise of the State Bank in 1971, which withstood the test of time for well over three decades. The current Corporate Centre of SBI, State Bank Bhavan in Mumbai, was built during his tenure.

Values in Leadership , a biographic tribute to Talwar by Narayanan Vaghul, Chairman Emeritus of the ICICI Bank and an ex-State Banker too, is an exemplary rendition of the ethics of Talwar, who inspired an entire generation of bankers to raise their standards of conduct. Vaghul was junior to Talwar in SBI and became Chairman of Bank of India at age 44.

The 86-page book, into its second print now, is enriching in content. It is a tiny volume where the author and the “authored” speak together to us. Vaghul himself is seen as a role-model by those who cut their teeth in ICICI Bank like KV Kamath who went on to head the BRICS Bank. Recently, while delivering the 11th RK Talwar Memorial Lecture, Chief Economic Advisor to the Government of India, KV Subramanian referred to Talwar’s “spiritually motivated leadership as an inspiration for public servants” and further said that his karma (duty) was driven by his dharma (sense of ethics).

Power of truth

Talwar was value-bound and bold enough to speak truth to power. This was not dependent on his interlocutor. For instance, he took a stand on the nature of financing of the jute industry as Superintendent, Advances Department, in Kolkata. It is stated that Ramnath Goenka (one of the most powerful media owners that time and himself a great crusader against the Emergency) who had interests in the jute industry had a longstanding grudge against Talwar. But the banker was not in the least affected by this.

Talwar’s approach and inner strength was conditioned by his spiritual beliefs. The most important incident which bears repetition is the incident relating to Sanjay Gandhi, Mrs Indira Gandhi’s second son, who wielded extra-constitutional authority during the Emergency (1975-77).

On a restructuring proposal of a cement company borrower, SBI had insisted on a change in promoters as a condition for further financial support. It was not Talwar’s decision. The promoters tried through Sanjay Gandhi to get this condition waived. When the files were perused, Talwar was convinced that the Bank’s decision was the right thing to do.

Union Finance Minister, C. Subramanian, called Talwar to tell him that he had instructions from “the highest authority in the land” to change SBI’s stance. Talwar was unmoved. Sanjay Gandhi was amused because he had not come across anyone who dared to disobey him. He sent word to Talwar to meet him. The SBI Chairman refused saying he had no constitutional authority and he was “accountable” only to the Government.

Sanjay Gandhi instructed the FM to sack the SBI Chairman. But the SBI Act of 1955 had no provision for the Chairman to be dismissed. And Talwar had built a formidable reputation as a person of high integrity. So the FM tried again saying if he were to step aside, he would be made Chairman of a proposed Banking Commission. Talwar politely declined the offer.

The Government then amended the SBI Act and then on August 4, 1976, he received a message sanctioning him 13 months leave (unasked for and covering his remaining tenure!) and asking him to hand over charge to the Managing Director.

Vaghul’s description of the Bank’s top boss leaving State Bank Bhawan that day is poignant. “Talwar left the Bank promptly at 5.30 pm which was his usual time of departure. There was hardly anybody to see him off. Everyone was scared even to be associated with him.” That day, the great man left in the classical Walter Scottian mode — unwept, unhonoured and unsung.

In the evening, Vaghul, his neighbour and former junior colleague, went to meet and said something along these lines with suitable opening gambits: “We have to accept the Divine Will with humility,” by way of commiseration. “Where is the question of accepting or not accepting? You have to learn to enjoy all the time the Divine play,” came the reply from the topmost banker of the day. That was quintessential Talwar. He was echoing the immortal spirit of the Uttarpara speech of Aurobindo Ghosh, the great revolutionary-mystic who, later in life, collaborated with Paris-born Mirra Alfassa (the Mother) to set up a spiritual community in Pondicherry.

Talwar had come under Aurobindo-Mother influence much earlier. After life at the top in SBI, at age 54, he retired to the Aurobindo Ashram in Pondicherry and except for a brief stint as Chairman of IDBI in 1979-80, he was not active in public service. He died in 2002, at 80.

Values in Leadership is “must” reading for anyone managing people or situations.

Meet the author:

N Vaghul started his banking career in the State Bank of India. In 1981, at the age of 44, he became the youngest Chairman and Managing Director of Bank of India. In 1985, he was appointed CMD of ICICI, which he transformed into India’s largest private bank.

( The reviewer is a top public sector bank executive )

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