Rivals Spirit Away Indian Bank Clients

Taking strong exception to the conduct of these banks, the Indian Banks' Association (IBA) has decided to evolve a code of ethics for bankers.

"This is a blatant case of hitting below the belt. One public sector bank should not promote itself at the cost of another PSU bank. We are in the process of evolving a code of ethics for self-regulation," a highly-placed source in IBA told Business Standard.

The issue came up for discussion at the IBA management committee meeting in Mumbai yesterday. Indian Bank chairman S Rajagopal drew the association's attention to the "conduct" of "fellow banks" in Tamil Nadu that have orchestrated a campaign to woo the depositors and corporate clients from the Indian Bank fold.

 

IBA chairman Rashid Jilani was not present at the meeting. The management committee members unanimously condemned the role of the "fellow banks" in "hitting the Indian Bank below the belt".

The State Bank of India and Bangalore-based Canara Bank are believed to have highlighted the state of affairs at Indian Bank at their branches in south India.

"Photocopies of newspaper clippings focusing on the Indian Bank's loss adorn the branches. In some areas, there are even posters on the same subject. This practice is mostly in sight at the semi-urban and rural Tamil Nadu. However, some of the branches in Madras and even Delhi have also resorted to this," IBA sources said.

The third bank to join the Indian Bank-bashing brigade is reportedly Mumbai-based Union Bank. The names of these three banks were mentioned at the IBA meeting yesterday.

According to the Indian Bank chairman, the "impact" of this adverse publicity is already being felt. "At rural and semi-urban areas the depositors are greatly influenced by this campaign. There is also an exodus of public sector deposits in the last one month," sources in Indian Bank said. A good number of corporate clients have also deserted the bank.

At the IBA meeting, Martin Fish, CEO of Standard Chartered Bank's India operations, urged the association to impose a heavy penalty on the banks which have launched the smear campaign. One IBA executive said, "The bank management's are unlikely to have instructed the local offices to snatch Indian Bank's business in this way. Some over-zealous field officers may have done this which is totally unethical."

SBI is believed to have resorted to another novel way to promote its business. It has reportedly put up banners highlighting the performance of loss-making PSU banks. The message is implicit: the depositors should know which bank to bank with. "We are seriously looking in the allegations, SBI officials.