Page 184 - A Banker Down the Rabbit Hole

sanction letter that we must purchase export trade bills drawn on
overseas parties for whom we had satisfactory Credit Reports on record
obtained from their banks. A Credit report disclosed their market
standing, credit worthiness, past conduct with their own bank, reputation,
financial means and nature of business conducted to ascertain whether
the same was related to the current loan transaction.

On scrutiny, it came to my notice that no such credit reports were
obtained and kept on records. It was clear that the earlier Managers were
purchasing such export bills without obtaining a credit report on the
drawee of the bill (other side importer-buyer).

I reported the matter to my Chief Manager who was also stunned on this
finding. Fortunately, he took my disclosure in the right perspective and
advised me to continue the same earlier practice so that we do not rock
the boat or disturb equilibrium of past established practice suddenly that
would have adverse repercussions on bank's business. Besides, we would
invite wrath of our customers as none of our predecessors had pointed
out this to them for past several years. But we also decided to obtain
the Credit Reports as per sanction letters simultaneously as a pragmatic
or practical approach to the issue.

Hue and Cry by our customers
We wrote to the respective banks of the importers of our clients for
providing us a Credit Report on the importing parties dealing with their
bank. Soon, we started getting the Credit Reports along with a usual claim
of charges of USD 50 to USD 100 for each such report provided. We started
debiting the customers' accounts for the charges which they were supposed
to bear. There was a great hue and cry. "Why we should pay when it is the
bank's requirement, not ours", was the most common stand. But we
persisted by telling them that such costs were born by customers as per
terms of loan and a standard practice across all banks world over.

Great Revelation
There was a big revelation from credit reports that our customers
themselves had never disclosed to the bank while getting their credit lines

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