A story of a successful bank

Nidhi Mathur
A Bank for the Buck, Tamal Bandyopadhyay, Jaico Publishing House, Pp 344, Rs 395.00

THE story of this successful bank, right since its inception and growth till today, has been written in a conversational style, without resorting to elaborate statistics or technical jargon, by a distinguished journalist.

The HDFC Bank is part of the new bank movement in India started in 1994 when the Reserve Bank of India opened up the sector to introduce competition and to force banks to be efficient and more productive. What the author has to say about the formation, staffing and the quality of services rendered by the bank and its chief executive officer, is based on hours of personal interviews with bankers, central bankers, policy makers, customers and investors in India and abroad. In fact the book is more about the people who conceived of setting up a first-class bank with a handful of staff and modest capital resources than about the bank itself.

While reading any book, it is normal for the reader to relate his own life and experiences to the narration. This way it becomes easy for the reader to gain insight into the subjects that matter to him or her and occasionally draw lessons. Some interesting aspects have been brought out in this book under review, like what constitutes leadership? What are the possible management styles? How does a senior management team operate, which involves cooperation, dissent and acceptance of hierarchy? Is there value for austerity in some aspects of functioning and not in others? What is the importance of networking? How does it operate? How is the business created and nurtured? Is a peep into personal lives necessary to make the narration more lively and convincing?

The global financial crisis has brought into focus several issues related to banking. It is recognised that the financial sector is special and, in particular, retail banking is special. There is often a temptation for senior management to take excessive risks and there are often huge conflicts of interests in the functioning of universal banks. The alignment of shareholders’ interests and management’s incentives is important, while loyalty of shareholders is desirable for all corporate entities; hence this has been alluded to in the narration.

It is necessary for a bank to avoid taking advantage of the pain of customers, but try to alleviate it, if possible. In fact, traditionally bankers cherished the trust of customers, but bankers’ trust has been increasingly undermined by the emphasis on transaction-based banking in preference to relationship banking. Defining core values that govern the functions of an institution is, therefore, important. The first Chairman of HDFC Bank was drawn from the Reserve Bank of India and he was made in charge of regulation of foreign exchange.

The HSDFC Bank turned 18 on 30 August 2012. Through his book, the author attempts to tell the story of the bank in the context of the overall banking space in India, which has been changing with freedom from regulations and with introduction of new products and new ideas.

The narrative is divided into 13 chapters and placed not chronologically but based on the theme. The first four chapters are about the making of the bank: how it was conceptualised, how the team was built and the fun of the initial days when many senior recruits wore helmets and supervised the brick and mortar work at the headquarters and at the branches, holding training lessons under tree of a textile mill compound in central Mumbai.

The final chapter explains why this bank has been successful. The bank did face problems in terms of occasional boardroom fights with the promoter on policies and minor egotistic skirmishes among senior people, but despite these, it has succeeded because it is nobody’s bank.

The conclusion drawn from the story of the bank is that freedom for professional managers, non-interference by the Board or the promoter and passion to succeed are very important ingredients for success.

(Jaico Publishing House, A-47 Jash Chambers, Worli, Fort, Mumbai-40001; www.jaicobooks.com)