I joined a Public Sector Bank as a Probationary Officer (P.O.) after passing M.A. in English. Though banking is a specialised job, graduates of all the streams – Arts, Science, Commerce – were eligible to apply for the job of Probationary Officer.
I was fortunate to crack the competitive examination and be appointed as Probationary Officer. Appointees were called Probationary Officers because they were on probation for the first two years. During the period of probation, we were exposed to both institutional training and on-the-job exposure. I learnt a great deal about varied aspects of banking like balance sheets, banking laws, ledger-keeping, reconciliation, credit, foreign exchange etc.
Further, there was an academic examination for bankers called CAIIB (Certified Associate) conducted by Indian Institute of Banking (IIB). Though CAIIB was not mandatory, but most of the POs acquired this qualification which entitled them to salary increments and strengthened their CV for promotion.
The two years training imparted by the bank coupled with the self-study for clearing CAIIB enabled me understand banking concepts which stood me in good stead during my service period. Particularly I gained good knowledge about Balance Sheets.
There are two sides of a Balance Sheet: Liabilities and Assets. In layman’s language, Liabilities are the sources of funds and Assets are the uses of funds. Capital, bank borrowings and Sundry Creditors are the main sources of funds. Stocks and Debtors (receivables) are the main uses of funds in the balance sheets of traders. Debtors on the Asset side are the customers who buy on credit.
If the trader is selling on credit, the receivables are clubbed under Debtors on the Assets side. The balance sheet shows the total of creditors and debtors on Liabilities and Assets sides respectively. But the trader has to furnish to the lender the lists of creditors and debtors as annexures to the balance sheet.
Old debts are not financed by a prudent banker.
The knowledge about intricacies of balance sheets helped me detect the misdemeanour on the part of my credit officer when I was holding the assignment of Loans Manager in a big branch. Our branch was located in the bustling market area. Our credit portfolio therefore consisted of loans and advances to shopkeepers.
The Credit Officer put up before me a credit proposal for enhancement of Working Capital Limit of a retail trader whose shop was located in the vicinity of our branch. Scrutinising the list of debtors, I was shocked to find the name of our own credit officer in the list against multiple entries. What it meant was that when our credit officer shopped from there, he didn’t pay. The borrower wouldn’t be having the courage to ask for payment. But since some stock had been sold, he had to move the sale amount from inventory to either cash or receivables on the Asset side. As payment was not received, the amount was shown under Debtors. The Credit Officer either didn’t expect the borrower to insert his name in the list of debtors or didn’t expect his boss to so minutely scrutinise the balance sheet and its annexures. As I subtly sought a clarification on his name figuring as a Debtor, the Credit Officer’s face became flush with shame and embarrassment.
