Page 232 - A Banker Down the Rabbit Hole

Meanwhile, the customer applied for a Letter of Credit for Rs. 12 crore
for procuring rice from an Indian company for export to Bangladesh. I
prepared a note for declining the request looking to unresolved valuation
of stocks as security for disbursement of Rs.100 crores, their core business
was manufacture of OFC and this was a diversification into totally
unrelated area like trading of commodity, where they had no past
experience. The amount of the Letter of Credit- Rs. 12 Crores was very
large, if looked at their first time transaction of this type.

The Chief read the note but was inclined to approve the transaction. I
requested him to recommend the transaction, if he so desired, on the
note prepared by the credit department with his own justification as per
procedure and for future records. He recommended the formal proposal
on the ground disclosed by the company that this was an excellent
opportunity to bag this export order to add to their profits substantially.
As it was falling under the discretionary power of the Head office, we
sent it to them with a copy to Zonal Office to keep them in loop as per
procedure.

Within a couple of days, the Zonal office wrote to Head office
disapproving the opening of Letter of Credit for export of commodity on
the similar grounds as suggested by our department and they also added
one more reason that the use of funds already disbursed for working
capital had not been ascertained due to dilly dallying by the company.
The Head office also declined to approve this transaction. Meanwhile,
this Chief got posting orders as Country Head for an Overseas centre of
the bank.

The next Chief of the branch joined. He had been working in Credit
Department at Head office for decades. He was considered as a
conservative executive but was respected for his excellent credit appraisal
skills. He had handled this account at Head Office also. He had supported
us whatever steps we had taken so far.

The company gave an application to us for endorsing their application to
RBI to remit USD 250,000/- to Finland to set up a subsidiary there. Our
confidence had eroded in the company's dealings. We asked them to wait

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