Good Faith III - Doing Wrong and Going Wrong

This happened when I was working at Kolkata. I was appointed as the Inquiry Authority in the case of Charges against a Manager. A Credit Facility was sanctioned for a borrower against the security of landed property belonging to the guarantor. This Manager had been entrusted with the duty of inspecting the property to verify its genuineness. The Account became bad and when the Bank initiated steps for enforcing the security, it came to light that the Bank had been defrauded. The property belonged to a person who had long been dead, much before sanction of the facility.

As per the Bank’s guidelines, inspection of such property has to be conducted independently, i.e., without the involvement of the borrower or the guarantor, basing on the address and other details of the property submitted to the Bank. This Manager had asked the guarantor, the so-called owner of the property, to take him and show the property.

Now, coming to practicality, in most cases, Bank Officers in good faith do take the help of the borrower or the guarantor to locate and inspect the property offered as security. However, in case any thing goes wrong, the Officer cannot take the plea that she/he had inspected the property shown by the borrower/guarantor.

The Inquiry System of the Bank is like this. Whenever any thing goes wrong, an Investigating Officer goes into the transaction, inspects the securities, obtains Statements from the concerned persons and submits a Report. If from this Report, it is found that any employee of the Bank was negligent in following the Guidelines, or was otherwise involved, this employee is issued a Charge Sheet. The Bank appoints a Senior Officer as the Inquiry Authority to go into the matter. A Presenting Officer (P O) is designated to present the Bank’s case. The Charge Sheeted Employee/Officer nominates a Defence Representative. The Inquiry process is somewhat similar to the judicial process. The P O presents the Bank’s case, submits the relevant documents (Management Exhibits) and produces Management Witnesses. They are cross-examined by the Defence Representative (D R). The D R submits documents in support (Defence Exhibits) and produces Defence Witnesses. After hearing both the sides, the Inquiry Authority submits his Findings. He has to say unambiguously whether he finds the employee/officer ‘guilty’ or ‘not guilty’.

In this case, I found that the Charge Sheeted Manager was a sincere Officer but since he had not made an independent inspection of the property he was ‘guilty’ as per the Bank’s norms.

Here, an unwritten law regarding the quantum of punishment is followed in Banks. A distinction is made between “Doing Wrong’ and ‘Going Wrong’. If the Charge Sheeted employee/officer is found to have deliberately done something wrong or has clearly been negligent, there is no escape for him but if has taken due care but has gone wrong in his judgement , only a minor punishment is imposed. Keeping this in mind, although I had no choice but to find him guilty, I diluted the matter by highlighting how he had no intention of doing anything wrong but had had gone wrong by over-trusting the borrower and the guarantor.

A minor punishment was imposed on him. And I felt very happy when two years later, he got a promotion.

The situation is not always so bright. People have violated norms to bring in good business and have been rewarded with good placements and promotions. But there have also been cases where sincere, hardworking and well-meaning employees/officers have suffered for believing customers and ignoring guidelines, all in the interest of increasing the Bank’s business.

They have been offered only tea and sympathy.