The unsavoury episode, involving former Syndicate Bank Chairman and Managing Director S. K. Jain has wide ramifications. Mr. Jain, now suspended (and under arrest), allegedly sought bribes to help out a prime customer by passing established procedures .What has added to the drama was that the highest executive of a government bank has been directly implicated. Second, the conversation between Mr. Jain and the senior representative of Bhushan Steel was intercepted by the CBI.
Obviously, the investigating agency had a lead, which means that Mr. Jain’s aberrant behaviour might have been known to them. But in one of the more sensational aspects of this case, it is claimed that no less than CBI director Ranjit Sinha listened in to the conversation. This must be a unique case where primary evidence of a crime is gathered first hand by the highest official of India’s anti corruption agency.
The usual way senior executives of government banks get into trouble is through the actions of their subordinates in which case it becomes a question of vicarious responsibility. It is likely that where the number one person actually instigated the action that leads to criminal behaviour on the part of one or more of his subordinates he will be clever enough to camouflage his own role.
That leads to the puzzling question as to why Mr. Jain was brazen enough to demand a bribe over the telephone (and that too the one which he normally uses). A person with even half the intelligence a CMD of a bank has (or presumed to have) would have a thousand other ways to ask and receive bribes if he wants to be corrupt.
It is also logical to think that the vice-chairman of a large corporate ‘negotiating’ a bribe with a senior executive of a nationalised bank would be more discreet.
It is certain that the case will continue to make headlines. The stock markets have reacted by pulling down Syndicate Bank’s shares. But that is a small price to pay for the alleged malfeasance of its chief executive.
A bigger loss, arising from the Jain episode, will be on the reputation of the bank. No matter how the CBI investigation proceeds — and Mr. Jain brought to justice — the image of the bank has suffered enormously.
The bigger worry is that all public sector banks will be tarred with the same brush. Newspaper headlines are already spotting a scam in the selection of their chief executives and other senior officers.
A solitary episode can be blown into a huge scandal if accusations are made freely against the system as a whole. Innuendos and slanted reports can cause much damage: the PSBs and their officials will be unable to defend themselves.
The Jain saga is in many respects similar to others where the entire system of government owned banking is made to answer for the misdeeds of a few.
For now, a few key issues need to be asked. (1) How did Mr. Jain go this far — to the position of a CMD — when at different stages in his career progression he would have been cleared by the CVC and the government? Answers to this will not be found easily. It is also certain that everyone connected with his selection to the top post would try to wash their hands off.
(2) The only explanation that one gets is that the whole process (of selecting senior PSB officials) is opaque and lends itself to devious practices. That might well be so —government interference in a PSB’s working is common knowledge. Even more certain is the influence certain corporate have in the process. The objective is to get a quid pro quo.
Incidentally, pressure is brought to bear not only in selecting a ‘friendly’ candidate but also getting him into a suitable position where he can reward his benefactor. .
(3) It is very well known that the risk-reward equation is thoroughly skewed in the banking industry. Public sector bankers get a pittance compared to their private sector counterparts. But to say that by merely increasing the remuneration packages, corruption can be minimised if not eliminated is gross over simplification.
(4) Public sector banks are already reeling under an image crisis — note the problem of mounting non-performing assets. A large share of NPAs is with these banks.
However, their top executives certainly do not deserve to be tarred with the same brush just because of the alleged corrupt ways of one of them.
narasimhan.crl @thehindu.co.in
