Money & Banking
Bombay Mercantile Cooperative Bank on slippery slope of decline
The purpose of this write-up is to present the warning signs of the Bombay Mercantile Coop (BMC) Bank’s decline and provide a few clues to identify and eliminate them before the Bank enters a death spiral. There are significant stages that an organization progresses through until it finds itself in full turmoil and collapse.
 
Organisations start the descent when they fail to recognise their own cultural internal warning signs and fail to effectively look into the mirror. BMC Bank has for long been showing this behaviour pattern. In response to startling wake up call, the Bank’s leadership/ management has resorted to the practice of excusing behaviour. Instead of effectively addressing them, these warning signs are being ignored; and. an attempt is being made at rationalisation for failings.
 
Effective leadership communication has become non-existent. Factions have started to form and the “us, against them mentality” within the organisation has got deeply entrenched. The bank is fully conscious that there are organisational problems, but fails to take corrective action, I guess for safeguarding vested interests. This has created a serious progressive situation extremely damaging to the banks operational efficiency and its reputation. When organisational decline results in the accurate identification of problems as is the case with BMC Bank, yet there are no actions taken, the cultural rot has set in and it has become a crisis for the bank
 
Conflict in the Board and top management is non-stop and a general divide and faction has resulted in divided loyalties. A general apathy has set in and self-serving groups have gained much more power and the vacuum of leadership is filled by those groups and persons who not adequately qualified to occupy such positions.
 
A few stars have become privileged elite, claiming disproportionate attention, resources, and opportunities. In an emotional chain reaction, pervasive negativity is fuelling further decline. The banks culture has become toxic and permits selfishness, greed, mistrust, disrespect, petty turf battles, and excuses instead of action.
 
I wish RBI and the Registrar of Cooperatives take appropriate actions to pave the way for the bank to come out of this vicious circle (Chakravuh).
 
You may also want to read…
 
 
 
(SSA Zaidi is a retired banker and consultant for training and development. He is also author of Anti Money Laundering /Anti-Terrorism Financing & Know Your Customer)
 

User

COMMENTS

S.S.A.Zaidi

6 months ago

Denial Mode

S.S.A.Zaidi

6 months ago

Mr Deboo
I am a writer and as a writer i have put forward my views as objectively as it could be.More than that I cant do anything .Management also seems to b in Denial mood
If any one seeks my advice i will be too happy to provide.

dinnyar deboo

6 months ago

I entirely agree with Mr. Zaidi that mudslinging is not going to take any individual anywhere. In fact Mr. Zaidi , why dont you team up with Mr Inamdar and try to save this august institution from a debacle. I can vouch for Mr. Inamdars integrity. His sole intention is to save this bank from a debacle, other than that he has no vested interest.
I hope that you step in the arena, instead of being a bystander. Mr. Zaidi, even you were an ex employee, and I am sure somewhere even you have fobd memories of this institution. I wish you good luck.

S.S.A.Zaidi

6 months ago

Creating a new liability to adjust the existing liability offends the established banking norms

S.S.A.Zaidi

6 months ago

Address the issues raised by Money life. Come out with rebuttal. Defamation suit may also be filed by the management. But Don’t indulge in mudslinging game— the mud will stuck with you (Management).

dinnyar deboo

6 months ago

I am deeply perturbed with the comments posted by various individuals against Mr. Z. B. Inamdar. Persons who have written against him have no idea about the amount of sacrifice which he has put in to upheld the rights of the workmen's and to save the bank from corrupt officials who have unfortunately milked this wonderful institution dry. I was working for this institution from 1992 - 2001, and therefore in a position to comment on the working of the bank and also in a position to comment on the character of Mr. Z. B. Inamdar. No person in the bank must have endured so much hardship to fulfill a noble task or say mission.
As regarding the institution, I owe a lot to this bank who has made a man out of me. I was a naive person, but got so much exposure thanks to the faith reposed on me by various officers and managers. Unfortunately those officers and managers have not been duly recognized and promoted , instead of that corrupt and sycophants individuals have been elevated to important positions. It is a myth that only nationalised banks have best of the staff, in fact this bank had the best of the talent. The working atmosphere was so good, that we used to look forward to go to work. This bank has given me the best of my friends, there was never a communal atmosphere, despite the fact that 90 % of the staff are muslims. We used to celebrate Idd and Diwali in the same spirit.

The Management from last ten to fifteen years have adopted a policy of divide and rule, and have crushed unionism and sowed seeds of hatred amongst the staff members. Chamchas are rewarded and honest and hardworking staff members are given step motherly treatment. Corruption is at its zenith. Where there was cordial atmosphere , it is replaced by fear of witch hunts. The man who was sacked for corruption has been made the head of the Bank. As regarding nonsensical comments on Zakir, I would like to advise Mr. Goyal to first verify facts and come out in the open, and use your actual name if you have the guts.

Lastly, Mr. Goyal kindly advise your political master (Akka) to stop these nefarious activities or the day is not far where he will have to bear the consequences . STOP WRITING USING PSUEDO NAMES, COME OUT IN THE OPEN IF YOU HAVE THE GUTS.

I pray to God that wiser counsel prevails upon Mr Goyal, Mr. Srivastava and Mr. Mohammed Shah Alam Khan and his entire coterie of chamchas and charlatans .

Sucheta Dalal

6 months ago

People posting defamatory messages here must be aware that IP addresses are easily tracked by the cyber crime police to trace who is posting the comments. Since the writing is entirely based on facts and documents, we will have no option but to share these with the authorities if the defamatory postings continue. Also, it is evident, even to a lay person, who is motivating these posts.

S.S.A.Zaidi

6 months ago

My write up was intended to provoke informed discussion about the present position the bank is in and what future course can be suggested for the bank to march ahead ,not the mudslinging match that is being played--it is baffeling indeed

S.S.A.Zaidi

6 months ago

Thanks Mr. Srivastava for your comment. I am glad to note that you agree with me on the fact that BMC Bank is in a pathetic condition, which ultimately was the aim of my article, and your admission to this fact vindicates my stand. But I do not agree with you on the reasons stated by you for the Bank’s debacle. It is quite clear that you neither know me as a person nor as a professional, otherwise you wouldn’t have passed such an atrocious, appalling comment. So, the only conclusion, which can be drawn, is that your comments are tutored.
Let me share the facts with you; I served in the Bank from August 1979 to April 1981. And during my tenure, I was never in-charge of recruitment. There was a committee headed by late Dr. A.U Sheikh. Members were Mrs. D’Souza HR Manager, GM and I in my capacity as the Principal. The final decision was always made by Dr. Sheikh. Only two relatives of mine were appointed during this period; one in Mumbai and the other in Srinagar, both as clerks, and both are retired now. My younger brother also joined the Bank. He was interviewed by late Mr. Merchant, the then GM. Perhaps, his decision may have been a bit influenced, as I was persuaded by him to join the Bank as Principal of the training college.
Now, I would like to request you to delve deeper, since you sound so much concerned, and find out how many relatives of which officials are in the Bank and at what positions? As regards to my professional integrity and ethics, even the present MD and former MD will vouch for it, even if they may disagree with me on certain matters, and may not be too generous in their opinion.
verifyy facts, before throwing mud on others because the mud may miss the intended person(s) but the hand of the thrower definitely gets dirty.











Subhash Goyal

6 months ago

In the recent attempt to black mail and pressurize the Bank, certain individuals including one, Mr. Z A Inamdar have branded them as Whistle Blowers. It is necessary to know about this Whistle Blowers.
He himself has contributed huge amounts of NPA as Branch Manager, for more than Rs. 20.00 crores, at Solapur.
He was caught red handed in removing cash from the Bank's safe. Sanctioned fraudulently loans at Solapur branch.
Availed fraudulently housing loan without any house in existence.
He was terminated from Bank's services.
He shows himself to be a Whistle Blower with such records in the Bank. The Reserve Bank of India had directed to file an FIR against him, which remains to be compiled. He is black mailing the Bank with the help of some journalist friend, whom he has misinformed about the Bank and showing himself to be a Whistle Blower. He should have got recovery of Rs. 20.00 crores NPA of the Bank caused by him before getting such news published against the bank.

REPLY

Zakir Hussein Inamdar

In Reply to Subhash Goyal 6 months ago

I was perturbed to read the comments of Mr. Subhash , how can he level such baseless allegation against me, does he know anything about me or he is being used by the present management. Not a single auditor has found any irregularity during my entire tenure as a Branch Manager at Solapur. In fact in is on the Banks record that I have turned this Branch from loss making (thanks to the present MD Mr.Shaha Alam who had sanctioned loans without any security at Solapur br. as Area Head)to profit making branch. All the respective management except the present management have issued me appreciation letters and also awarded me with Chairman's Silver medal for my outstanding performance . It is true that I was terminated by this present management for political reason without assigning any reason as I had exposed their nefarious activities from time to time, had there been any irregularities committed by me the management could not have taken me back in the bank instead they would have taken legal action against me for my actions. Mr.Subhash should make his stand clear and come out with proper evidences failing which I have no option to but file a defamation suit against him before the appropriate court of law.

Akash Srivastava

6 months ago

I have seen comments of Mr. S S A Zaidi, who appears to have been carried away by the defamatory article published in Money Life Digital. Mr. Zaidi has no moral ground to make such comments, more particularly when Mr. Zaidi himself was in the bank, having authority to recruit and appoint staff in the bank, who by misusing his power, position and authority, got his brother, brother in law and close relatives and various others appointed in the bank, which has caused surplus workforce in the bank. The bank has suffered on account of such surplus recruitment by Mr. Zaidi for the past 36 years. Mr. Zaidi after loading the bank with excess staff, left Bombay Mercantile Co-operative Bank and proceeded to some other bank for good. The Bank has been feeding his brothers and close relatives and family members as well as various persons close to him for past 36 - 37 years. A colossal and perpetual loss caused by him in such manner has brought Bombay Mercantile Co-operative Bank Ltd. in such pathetic condition. After leaving the bank, he should have recalled his relatives to the place where he had gone, which he did not do. Mr. Zaidi should comment that he has been a major cause for creating such a situation in the Bank. Who will recover such losses from Mr. S S A Zaidi?

REPLY

S.S.A.Zaidi

In Reply to Akash Srivastava 6 months ago

Thanks Mr Srivastava for your comment-I don’t think you were in the bank when I was there-so I am sure you don’t know me either as a person or as a professional. If you knew me you would not have passed the comment on my morality and honesty the way you have done Your comment seems to be tutored—Before commenting on my relatives being in the bank—look at how many relatives of which officials are in the bank and at what position—I dare you to find anything that does not stand the test of professional honesty and probity I value and I am proud of. Even the present MD and Former MD of the bank lso will not point a finger at my professional honesty even if their opinion about me may not be generous and kind—and it is not
Anyway—My tenure in the bank was from August 1979 to April 1981 –I moved to Bank of Oman Now Mashreq Bank in May 1981.I was never in charge of the recruitment .There was a committee headed by Late Dr A.U Sheikh. Members were Mrs Dsouza Hr Manager, Gm and I in my capacity as the principal .Final recommendation was always that of the chairman Dr Sheikh. Test Papers were set by me and checked by me and my faculty
During the period I was with the bank only two of my relatives were appointed one in Mumbai and the other in Srinagar –both as clerks-Both of them have retired. My younger brother also joined the bank He was interviewed by late Mr Merchant the then GM—his decision may have been a bit influenced as I was being persuaded by him to join the bank as principal
There are my relatives of working in the bank so are the relatives of other executives—But find out when these relatives of mine were recruited when what influence i had in their recruitment—even my son was in the bank. All of them joined the bank after i had moved on
So always be accurate with facts before commenting on some one you don’t know [personally and professionally AND without being sure of what the genuineness of the fact
You should have picked up points from my article detailing the warning signs and made others to intronspect and brainstormed the discussion points







Zakir Hussein Inamdar

6 months ago

Sir, it is pity that no action is being taken against the culprits, any delay in action will eventually harm this Great Institution and thereby endangering the future of more than 1600 employees and their dependence. The inaction by the regulatory authorities is a result of King Fisher Airlines and its employees' debacle. I sincerely hope that some corrective steps are taken immediately so as to save this institution and its employees.

REPLY

S.S.A.Zaidi

In Reply to Zakir Hussein Inamdar 6 months ago

Have u read my article carefully?? U r in the bank initiate positive actions.There is no reason why the institution cant be revived.

Akash Srivastava

In Reply to S.S.A.Zaidi 6 months ago

I have seen comments of Mr. S S A Zaidi, who appears to have been carried away by the defamatory article published in Money Life Digital. Mr. Zaidi has no moral ground to make such comments, more particularly when Mr. Zaidi himself was in the bank, having authority to recruit and appoint staff in the bank, who by misusing his power, position and authority, got his brother, brother in law and close relatives and various others appointed in the bank, which has caused surplus workforce in the bank. The bank has suffered on account of such surplus recruitment by Mr. Zaidi for the past 36 years. Mr. Zaidi after loading the bank with excess staff, left Bombay Mercantile Co-operative Bank and proceeded to some other bank for good. The Bank has been feeding his brothers and close relatives and family members as well as various persons close to him for past 36 - 37 years. A colossal and perpetual loss caused by him in such manner has brought Bombay Mercantile Co-operative Bank Ltd. in such pathetic condition. After leaving the bank, he should have recalled his relatives to the place where he had gone, which he did not do. Mr. Zaidi should comment that he has been a major cause for creating such a situation in the Bank. Who will recover such losses from Mr. S S A Zaidi?

What exactly is the role of the new IT subsidiary of the RBI?
The Reserve Bank of India (RBI) has set up a subsidiary to take care of its information technology (IT) requirements including cyber security needs of the central bank and its regulated entities. Nand Kumar Saravade has been appointed as its chief executive effective 1 June 2016. Following is the notification from RBI dated 16 May 2016 –
 
“Reserve Bank of India (RBI), a statutory organization established under the RBI Act, 1934 is in the process of setting up of an Information Technology (IT) subsidiary to take care of the IT requirements including the cyber security needs of the Reserve Bank and its regulated entities.
 
The IT subsidiary would focus on IT and cyber security (including related research) of the financial sector and assist in IT systems audit and assessment of the RBI regulated entities; advise, implement and manage internal or system-wide IT projects (both the existing  the new) of the Reserve Bank as mutually decided between the Reserve Bank and the subsidiary.
 
The IT subsidiary would act as a catalyst for innovation, big systems and new ideas apart from having the capability to guide the regulated entities in the IT areas of their operations as also for the RBI’s IT related functions and initiatives. Given the need for inter-operability and cross-institutional cooperation, the entity would be expected to be effectively participating in setting up of standards to strengthen Reserve Bank’s role as regulator. The entity shall have Advisory Committees to provide guidance on cyber security, current and futuristic requirements of entities regulated by the Reserve Bank, particularly from the regulatory and supervisory perspectives, and to the Reserve Bank on its IT systems and its projects. The subsidiary would report periodically to apex level committees of the Reserve Bank including the Board for Financial Supervision, the Board for Payment and Settlement Systems and the IT Sub-committee of the Board, and RBI’s Central Board of Directors as required.”
 
Moneylife readers are familiar with Mr Saravade. Moneylife Foundation organised a seminar of Cyber Security and Privacy in July 2015 with Mr Saravade and this writer as speakers. Mr Saravade is an ex-IPS officer with specialization in cybercrimes and forensics. Prior to RBI, he was CEO of Data Security Council of India. Prior to that, he worked with Citi, ICICI, NASSCOM and CBI. The new RBI subsidiary will have four verticals –
 
1. Cyber Security
2. Research and Innovation including collaboration with other institutions including IDRBT, Hyderabad
3. IT Systems Audit and Assessment of RBI regulated entities
4. IT Project Management including Support and Advisory Services
 
As the entity will be subsidiary, it cannot have regulatory functions, which RBI departments like Department of Banking Operations and Development (DBOD), Department of Banking Supervision (DBS) and Urban Banks Department (UBD) are performing. This is also clear from the notification, which says – “the entity would be expected to be effectively participating in setting up of standards to strengthen Reserve Bank’s role as regulator”.
 
The constitution of the new subsidiary is also not clear whether it will be registered under societies act or companies act, or any other act. RBI already has an IT subsidiary as Institute for Development & Research in Banking Technology (IDRBT) in Hyderabad, registered as a society, whose main functions are (a) to maintain Infinet, which connect all banks for National Electronic Funds Transfer (NEFT) and Real-time gross settlement systems (RTGS) on closed user group ( CUG ) basis; (b) provide digital signatures to banking and financial institutions (FI) under the name IDRBT- Certifying Authority (IDBRT-CA) and (c) IT related training to bankers. It is yet to be formalised and seen, what relationship and synergy will exist between new subsidiary with RBI IT department, DBOD, DBS, UBD and IDRBT. One reason to create a subsidiary is to have non-bureaucratic policies, processes, procedures and compensation, which may not be possible as a department of RBI.
 
The subsidiary will cater to cyber security needs to RBI and all its regulated entities. That means all banks and FIs will be covered. It is good news to bank customers and also to bankers that RBI is waking up to the potential of good, bad, ugly, nasty  and hostile usage of Information and Cyber Technology, especially after some recent high profile cybercrime incidents such as involving Bangladesh Bank and The Society for Worldwide Interbank Financial Telecommunication (SWIFT). The same was later replicated at many other banks. 
 
A lot needs to be done to secure our national critical IT infrastructure. The current spate of hacking, SWIFT attack, ransomware, card frauds, Phishing attacks, ATM heists, security holes in network and applications need to be addressed asap. With schemes like JanDhan Yojna, RuPay cards, DBTL, Aadhaar, mobile banking, payment banks, PM Suraksha and Jivan Jyoti Bima Yojna. A lot of new crimes will be introduced in Indian banking environment. Bank customers will have lot of expectations from Mr Saravade. RBI should give him a free hand.
 
 

User

COMMENTS

Mahesh S Bhatt

6 months ago

Sir recently Maharashtra Government had Ransomware attack.Big 4 & MNC's are fleecing top Bankers acting as if they have best tools/policies/processes & claim zero breaches.

But big losses like Bangladesh puts them naked.

They are not ready to listen an expert who has multi domain technical experience.We enjoy USA killing Osama but we after 30 years poltically corrupt nation has Dawood's talking & Eknath Khadse Minister resigning after call tap

Pawar Power is intact with Bhujbal guinea pig.Jayalalitha( Amma Bazaar/IT conviction acquittal)/Lalu ( under trail 23 years ) are ruling murdering people again is mere Political News Entertainments.

Security is joke & people enjoy rapes even Judicial rapes & Military rapes are news stories.

So forget & enjoy the fun rather than doing serious National Assets Securitizations & Protections.

Oh Darling Yeh hai India yahan toh Judge ko bhi Time definitions hai hi nahin magar Summer vacations hai.

Ram ram Mahesh ka pranams (www.kirticorp.com)

Milind Nadkarni

6 months ago

Separation of IT services as a separate unit is definitely a move in the right direction. However, I humbly suggest that let there be mechanism set to measure effectiveness and quality of services rendered by this IT unit. The customer front ending user interfaces, should be simplified so that a person with average IT skills can navigate the web sites and get to what is relevant to him quickly and accurately. Testing of systems is below standard - with serious errors appearing on the web sites (minimum deviation in user experiences using commonly used browsers, missing pages at provided links, missing documents for download to public). Information of the web site needs to be frequently reviewed and updated (if required) to make it relevant and accurate. There should be a separate facility for customers to "log calls" for IT malfunction issues, which may have nothing to do with the transaction issues.

Nifty, Sensex waiting for a trigger – Monday closing report
We had mentioned in Friday’s closing report that Nifty, Sensex might shed some gains. On Monday, the major indices of the Indian stock markets were trading listlessly and closed the day’s trading with small losses. NSE trading volumes were also low. The trends of the major indices in the course of Monday’s trading are given in the table below:
 
 
Reserve Bank of India Governor Raghuram Rajan is due to announce the second bi-monthly monetary policy review of the fiscal on Tuesday, at a time when he has become the focus of controversy sparked by attacks for failure to lower interest rates and boost the economy. Expectations of a rate cut at RBI's Tuesday policy meeting are lower after retail inflation rose to 5.39% in April, which was above Rajan's near-term target of 5% by March 2017. The latest official data showed India was one of the world's fastest growing economies in the March quarter, with GDP growing at a rate of 7.9%. On the other hand, making the case for a rate cut, growth in India's private sector output declined in May as manufacturing and service sectors lost momentum in conditions of softer domestic demand, while services slowed sharply to a six-month low, a business survey on performance of the services sector showed on Friday. The Nikkei Manufacturing Purchasing Managers' Index released on Thursday rose marginally to 50.7 in May from 50.5 in April.
 
The Indian rupee on Monday strengthened by 37 paise against US dollar during the morning trade. Opening at 66.91 to a US dollar, the Indian rupee reached a high of Rs66.88 per US dollar. On Friday, the rupee closed at Rs67.25. Experts are of the view that rupee would further strengthen against the US dollar intra-day in wake of poor US job data. RBI's reference rate is at Rs66.96 per US dollar.
 
Finance Minister Arun Jaitley will on Monday hold a quarterly performance review with heads of public sector banks (PSB), said an official statement, at a time when these are severely stressed by bad loans and have incurred record losses in the last quarter. Jaitley would "review the overall performance of PSBs during the financial year 2015-16 as well as with regard to the flow of credit to agriculture, insurance and MSE sectors among others", the statement said. The minister will also review the progress on the government's new initiatives for financial inclusion, including Stand Up India, MUDRA Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Surkasha Bima Yojana and Atal Pension Yojana among others, it added. He will also take stock of the performance of PSBs with regard to the new projects and proposals and stalled projects.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 

User

COMMENTS

Sreepathid

6 months ago

Opto Circuit BSE Health Care Top Loser ?
you should take some other company as example.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)