I work for a private sector bank in India. I am involved in some of the most sensitive decisions revolving around lending very, very large sums of money to large corporate borrowers. Daily, I patiently hear out business-side colleagues push for cases on grounds as flimsy as “a good name” of a particular corporate house or how some company is systemically too important to fail.

And this bravado is in the face of staggering debt on most of these balance-sheets, teetering on business models with more moving parts than a nuclear power plant. Especially if these companies own nuclear power plants or steel plants or coal-fired Super Critical Ultra Mega Power Plants (yes, this is the official term for really, really big thermal power plants), etc.

Banks. Love ’em, hate ’em, but you can’t avoid ’em. Much like people.

Over lunch the other day at work, my team mates were swapping war stories about which was the pushiest business colleague they had encountered in their decade-long career. As someone waxed eloquent about their latest escapade, my mind went back to that fateful day in 2015 when my life changed completely.

Back then I was working with a Non-Banking Financial Company (NBFC). This is a type of financial institution meant purely to cater to the needs of “unbankable” customers. Those with less than august credit scores, questionable backgrounds, and worse, inexperienced promoters seeking funding for their ego projects.

The loan appraisal process in this company was pretty standard. The relationship manager (RM) would engage with the client, while the credit analyst would type out a detailed analytical note covering all aspects of the business and the promoter’s background. The note would then move to the risk team, who would comb through it. Once the risk team was ready with a recommendation, the final note would reach the sanctioning authority (SA). The SA – consisting of independent directors, sector experts and senior management – would critically evaluate the proposal, weigh the arguments of the business and risk teams and arrive at an informed decision.

In those heady days of my naiveté about how the financial services world worked, I bought the whole thing hook, line and sinker. I was part of the risk team so I read each note with great care, studied the financial Excel model that accompanied it assiduously. I felt real anxiety if the points raised by me were not discussed in the presence of the SA. I wanted them to understand all the risks and then take a well thought-out decision.

I expressed my concerns vociferously to my reporting manager and his reporting manager, trying my best to push back what I saw were increasingly shady deals. Unknown promoters with limited experience in the sector concerned, debt coverage ratios thinner than Paris Fashion Week models, aggressive sales and profitability projections. You name the red flag and it was there cheerily fluttering away. By now, my workplace had become a nightmare.

But, the deals kept coming, kept getting approved and kept getting disbursed at an alarming frequency. Unmindful of these glaring issues, thousands of crores of rupees were being sanctioned in SA meetings. I was at a complete loss to understand this brakeless loan disbursement train that my organisation had turned into over the past two years.

I had a friend who worked with our debt syndication team. His job was to break up large loans granted by my organisation into smaller pieces and distribute these to other NBFCs/banks. This way, the original lender was able to offload parts of large exposures and free up capital to lend to newer projects. Apart from this, the original lender also earned a fat fee for this effort, anywhere between 0.5 per cent to 1 per cent of the total loan amount. Therefore, the bigger the syndication exposure, the bigger the fee income.

It was my colleague who became the bringer of unbearable clarity. All those shady deals that I had spent many nights poring over and writing reams about, were all intended for syndication. Full syndication within a year from their sanction. My organisation would keep the fee and dump the asset. But who is going to buy these assets? Who in their right mind will willfully participate in such outrageous risks? These were bad assets.

I will never forget what she told me. In her lovely Delhi-accented English, she simply said, “PSUs hai na”.

Public sector banks owned by the government were lapping up these loans enthusiastically. How do you answer tough questions posed by their sanctioning authorities? How do you justify unviable projects that should never see the light of day? How does one explain subversion of basic economic laws of demand and supply? Are such serious idiots even real? By now, I think I was screaming.

My friend smiled. She led me to a nearby coffee shop and set me up with some overpriced coffee. She spoke in an even, measured tone that somehow made it sound like everything she said was obviously right and correct.

“Look, have you seen the film Chicago? You remember that song ‘Razzle Dazzle ‘Em’? That’s exactly what the world of finance is. Showmanship and the right words. Everyone is in on the game. Sab kuchh set hai. There are consultants who act as intermediaries and liaise with bank officials of Assistant General Manager (AGM) cadre and above. They manage the decision-makers internally. Rates and sharing ratios are all fixed. Syndication folks like me simply sweet talk the deal into execution. Wear a nice suit, sound confident and smile. When the money train toots its horn, it is very simple.”

“But the risks?” I asked numbly. She replied in her gentlest voice: “The whole lot (officials) get transferred every three years. So that is that.”

I don’t remember the rest of the conversation. Or that year. I remember thinking some days later that this picnic cannot last. Someone would figure it out. And blow the whistle. It has been three years. The organisation is still there, my friend has been promoted twice, the PSU banks are also still there, awaiting their share of the most recent bailout package. And I am still here. Marvelling at it all.

I am brought back to the present at the lunch table by the loud laughter over a joke about the many banking scams being discussed on TV. I say: “Guys, do you know about these research projects on the psychological effects of money on human behaviour?”

Laughter is now replaced by confused silence. Someone giggles.

“Apparently, money lowers empathy levels, clouds moral judgment and even increases aggression in controlled experiments with money, like rewards for actions. Since all organisations are run by humans, this is only natural, isn’t it?”

Silence is now replaced with complete perplexity.

Someone says, “Wait, what are we talking about?”

This story was first published in the Patriot.