Trust, But Check

When I was posted as the Head of a branch in Mumbai, I was asked by my Zonal Head to investigate an alleged case of fraud to the tune of Rs 55 million, an amount that called for handing over the case to CBI. So conclusive facts had to be gathered before that.

It was a big branch, both in size and volume, headed by an officer senior to me. In fact, I had learnt a few threads of banking from him. During his tenure, the loan was disbursed, but it was sanctioned by his predecessor, who was also senior to me. It was a difficult situation for me, but the job had to be done, though their annoyance was quite palpable in their words and reactions.

In brief, a big loan was sanctioned at the behest of an officer, Pranay, considered to be very efficient, diligent and confident. He was one of the confidants of both Heads of the branch. They blindly believed what he said and deed.

The biggest blunder was that both Heads didn’t bother to check the collateral security being offered by the borrower. The property which was said to be 6500 sq.ft. turned out to be a godown of hardly 500 sq.ft. Had they visited the place themselves, they could have detected this ploy to defraud bank.

It was a clear case of divergence of funds. Due to non payment of interest and instalments, the account turned bad (NPA), and then the skeletons started  tumbling out of the closet. The case was declared as fraud and reported to RBI, and the matter was finally handed over to CBI.

All officers who were involved with the loan, right from the Branch Heads to supporting officers and auditor were booked. It was a long-drawn-out case. During CBI’s investigation, their houses were also raided, but nothing incriminatory was found.

Interestingly, in the meantime, the auditor was transferred from Mumbai to Gujarat, and during the raid at his house, Gujarat being a state where prohibition was clamped, two bottles of liquor were confiscated, and a different case altogether was framed against him.

Finally, malafides were not proved during the investigation, except in case of Pranay, who got dismissed and finally landed in jail. But all were punished under the service regulations for negligence and dereliction of duty.

The case was not unique. Most of cheating and fraud cases in banks are based on this premise. Trust or confidence is paramount in banking and finance. When it gets weakened, something untoward is bound to happen, and the same is also true in a case of overconfidence.

When branch operations were computerised, I had seen several cases, where a smart and computer savvy guy, in the name of helping old folks, played nasty with their confidence in him. Suspicion may be a bad thing, but in banking, one needs to suspect, before believing.

–Kaushal Kishore



  1. Thank you, Kaushal, for the valuable lesson on using wisdom in our life. Although your interesting tale is about the bank’s procedures, the overall message is clear – it is necessary to use caution in our dealings with everything, and I couldn’t agree more.


    Liked by 1 person

    1. Thank you, Joanna for your thoughtful comment. Normal caution and prudence are essential particularly in financial deals in this high-tech era, when a fraudster from across the border dupes many people by sending fake email and spurious links.


  2. Thanks for this tale Kaushal Ji. Gives us such a peek into the world of Banks and how people who are handling money, handle people and their greed. I also suspect, of how the big guys like the Mallaya’s and others got the bank to deliver loads of money at their doorstep. Is it really because Banks love to give loans?

    Thank you for these important tales.
    Narayan x

    Liked by 2 people

    1. I’m glad you liked the post. Thank you, Narayan ji for posing a query regarding Mallya that has not an easy and short answer. I’ll write a separate post covering those aspects. As regards banks’ love to give loans, yes, it’s true, banks do love, because loan is the essential part of banking business and main source of revenue. No bank can survive without loaning activity.


  3. Actually most of the people I have met across the counter at various banks, work very diligently and sincerely. But then mishaps happen. Errors happen. And sometimes the punishment is too harsh. And actually the real fraudsters get away, fighting their cases in courts for years together.

    Thanks for sharing.

    Liked by 2 people

    1. I fully resonate with you, Shashi ji, your observations are spot on. Even genuine mistakes are not spared. Unscrupulous elements are there in the system, but in decimals, though they bring disrepute to banks. Thank you for sharing your beautiful reflections.

      Liked by 1 person

    1. I can’t agree more, Grace! Suspicion pays when it comes to finance. When you are lured with a lottery, prize money or free ticket, you must be suspicious. Otherwise you’ll be duped.

      Liked by 1 person

  4. I heard from the news on TV of a case of not checking out the collateral for a loan. It was said the collateral were gold bars in a bank, but it turned out to be copper bars. I can’t believe people didn’t go there to check it out.

    Liked by 3 people

    1. Now-a-days, there are gold testers in banks, as almost all banks are financing against gold ornaments. Bars are not preferred. Without a certificate from the gold tester , no gold loan is sanctioned or disbursed. But if gold testers are also working hand in glove with borrowers and bankers, only God can save.

      Liked by 3 people

      1. It’s not transferable, my friend. You like , comment and follow others, they will follow you back.


      2. Thank you for sharing your knowledge about banks. So there is certain kind of safeguard against fraud, but in the copper-gold case, I guess the bank is either bribed or blindsided, or the gold tester is in collusion with the criminals. Banks are supposed to be the safest place, but they are often the center of attention for thieves.

        Liked by 2 people

      3. It’s not so, my friend. Sporadic cases are always there in every sphere of life. Exceptions don’t make the rule. Millions of people impose faith in banks for some concrete reasons.


  5. I learnt a few new terms about how banks work today. You’ve had some interesting experiences Kaushal ji.
    And yes, diligence and awareness is the foremost thing in almost all the spheres of life, without which we get to hear such cases. Thanks for sharing this.

    Liked by 2 people

    1. Yes, Aahna, we have to be diligent. Despite so many awareness campaigns by banks and RBI, you must be reading in newspapers how people are duped by easy allurements like lottery, prize, free tickets, KYC updation etc. Thank you for sharing your thoughts.

      Liked by 1 person

    1. You’re right. It happens so often, as people like easy money. The only protection available is normal diligence and prudence. Thank you for your kind comment


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