Page 31 - A Banker Down the Rabbit Hole

also lower. In the nineties, I saw a noticeable change. The system of
getting duplicate set of keys entirely went away. The painted plated fixed
on the truck first changed to "Hypothecated to XYZ bank" and then very
fast it got reduced in impact to "Our bankers, XYZ Bank".

The competition from several banks entering the same segment made
the appraisal lax and security features less rigid. Oversupply of vehicles
made freight cheaper and many transporters had lower cash flows not
adequate to meet EMIs. Many defaults were made turning to NPAs in
the middle of eighties. Of course, the scenario improved later.

Installing Second hand machinery for a new one
financed
Incidentally, while heading a branch, I went for inspection of brand new
machinery installed for a loan of Rs 20 lakh. It was nicely installed in a
factory shed and very well maintained. I had a look at the machines,
counted them, and checked the make and model. I was pretty satisfied
and the machines looked new. I was about to turn back to leave the
premises, when suddenly I noticed a small patch of yellow colour in one
corner in the region near the ground was different form green colour of
the entire machinery. I leaned closer and was utterly surprised that this
machine along with all others had been repainted to look new.

I confronted the borrower and he had to admit what he had actually
done. I warned him to repay the entire Term loan within two weeks or
we would be filing FIR with police for this criminal fraud with the bank.
The very next day, the borrower came with his father who happened to
be a respectable person of the locality and apologized for the mistake of
the borrower. He assured to repay the loan in one month period. I asked
him to admit the mistake and give in writing that loan will be adjusted
in one month and he stood as guarantor. He did as directed. Fortunately,
the loan was adjusted as the parents of the borrower were well off. From
that day onward, I became even more vigilant in appraisal of loans and
post disbursal inspections in the coming years.

28 | A Banker down the Rabbit Hole