SBI: A limited account

This book suffers from a major handicap in the form of a meticulously researched multi-volume The Evolution of the State Bank of India authored by Prof Amiya Kumar Bagchi and Abhik Ray, which was first published in 2006. The duo drew on the previously inaccessible SBI archives to detail the unique evolution of India’s premier banking institution. Arguably, it’s difficult to write anything new on SBI’s history after such a masterpiece. 

So, Vikrant Pande’s book ends up looking more like a 200-page hasty summary of  The Evolution…”. That’s still understandable, but where the book really disappoints is a failure to go beyond what is already in the public domain on a host of critical issues. For example, only three pages have been devoted to the Harshad Mehta scam in which several SBI officials were allegedly involved. Mr Pande just sticks to a brief statement of facts, ignoring the fact that readers — even casual ones  — can get much more information by googling newspaper reports of that time. 

The author depends too much on other published works (past chairmen’s speeches; D N Ghosh and N Vaghul’s memoirs, etc), and quotes many of them generously. In the process, however, the newness, which is essential in a book of this kind, is missing. Consider, for example, the way the Nagarwala scandal of 1971, which involved Indira Gandhi and officials of her secretariat, has been dealt with. The author just gives a summary of the events that led to Rs 60 lakh spirited away from an SBI branch under mysterious circumstances and leaves it at that. Instead of raising unanswered questions, the author has focused on how the entire amount was recovered quickly. Even here, the author has banked almost entirely on the version given by then SBI chairman R K Talwar.

Despite these obvious gaps, the book can be useful, not least because few would have gone through the thousands of pages of the minute details in Prof Bagchi and Mr Ray’s work. Also, it does offer some interesting glimpses of the history of how banking emerged in the last two centuries, and how closely SBI participated in the key events that shaped a nation. SBI was established in 1955, but the story of its being began two centuries ago. The Presidency banks of the 1800s — the Bank of Bengal, the Bank of Madras and the Bank of Bombay, set up by the British to facilitate trade and the repatriation of remittances to England — were its forebears. The book narrates the compelling circumstances that prompted the founding of the Presidency banks, how they fared back in the day and why they coalesced to emerge as the Imperial Bank in 1921, which came to be SBI. 

The anecdotes add to the appeal of the book. It is interesting to know, for example, that the first batch of 32 probationers, who were housed at the State Bank Staff College, were initially required to pay Rs 7 per day towards the cost of food and 25 paise for each bucket of hot water. When the trainees protested, they were given a stipend of Rs 150 a month. The code of conduct at the college didn’t permit outings such as going to the cinema, shopping, or even a visit to the hairdresser. 

Did you know that then governor of Reserve Bank of India C D Deshmukh was dead against nationalisation of the Imperial Bank which saw the birth of SBI. In a memorandum, he wrote, “I am more than ever convinced that the proposed nationalisation would be a serious mistake…” Ironically, it was Deshmukh who as finance minister announced the government’s acceptance of the nationalisation proposal in December 1954. 

The book gives several examples of government interference in the working of the bank, despite the then finance minister’s assurances to the contrary in Parliament. Salaries and perquisites were one such issue. The disparity in the salary of an ICS secretary in the government (Rs  4,500) and the managing director of Imperial bank (Rs 7,500) in the early 1950s was the topic of animated discussions in Parliament, with prime minister Nehru admitting that the salaries of the bank were “preposterously high and could not be continued”. So, the salary and perks were reduced drastically. Matters came to a head later when the government instructed the bank to discontinue payment of bonus to senior officials.  In protest, SBI’s first chairman, John Matthai resigned much before the expiry of his term. Much later, R K Talwar, the first non-civil servant chairman of SBI, also had to go under more trying circumstances.

Sanjay Gandhi, who was miffed with Talwar for refusing “restructuring assistance” to a cement baron close to him, went to Parliament to change the relevant Act to give powers to the finance minister to remove bank chairmen. This was after Gandhi asked the Central Bureau of Investigation to look for grounds on which Talwar could be dismissed, but the investigative agency drew a blank. Finally, on August 4, 1976, Talwar was given 13 months’ leave and was asked to hand over charge immediately. There was, of course, hardly anyone to see off the SBI chairman that evening, so great was the atmosphere of fear at the time. 

Except for one unlucky gentleman, other SBI chairmen have escaped such public ignominy in the recent past. Thank God for small mercies!