, 18 tweets, 8 min read
The rot afflicting PSBs had started in 1976 when the #SBIAct was amended to authorise the Govt to remove the SBI Chairman w/o citing any reason.

Prior to this, chairman couldn't be removed before completion of his term, w/o giving "sufficient ground".
This amendment to SBI Act is commonly known in banking circles as #theTalwarAmendment as it's sole purpose at that time was to remove #RKTalwar, the most illustrious chairman of #SBI, who refused to bow to a diktat of #SanjayGandhi, the most powerful politician at the time.
The complete story behind this amendment is given in a booklet "R K Talwar: Values in Leadership" by #NVaghul, the illustrious chairman of #ICICIBank, who started his career in SBI and had been mentored by none other than Talwar himself. The story briefly goes as under.
SBI had given a loan to a cement company which came under stress due to mounting losses in the co. The co. requested for #restructing of the loan to enable it to come out of the difficult situation. Bank approved the restructuring package, but with the condition that ...
the promoter steps down from #CEO position in the co. and lets professional management take charge. This condition was stipulated since, as per Bank's analysis, #mismanagement was the primary reason of co. incurring losses & #ChangeOfManagement was necessary to revive it.
It's noteworthy here that even in 60's & 70's, it was common practice in SBI to ask promoters to relinquish management position in their company, as a pre-condition for any revival package, whenever the Bank felt that mismanagement was the reason behind sickness in the co.
As always, promoters didn't want to let go of their control & resisted this condition but the Bank didn't relent.
The promoters were close to #SanjayGandhi and sought his intervention. At that time, the country was under #Emergency & Sanjay Gandhi was the most powerful..

the most powerful person in the country.
He called up the #FinanceMinister & asked him to get the condition waived. The FM, in turn, called up #RKTalwar, the bank's chairman, asking him to do the same.

Talwar called for the case file and after going through it came to
the conclusion that it wouldn't be in the Bank's interest to waive the condition of management change. So he called up the FM and told him that the condition cannot be waived. The FM tried to impress upon him that these instructions had come from the "highest authority"
and it would be in everybody's interest to comply, but Talwar didn't relent.

When it was conveyed to Sanjay Gandhi, he asked for the Chairman to meet him. Talwar, however, refused to go, saying Mr Gandhi holds no official position to summon him for a meeting.

Sanjay's response was swift : "sack him".
That was easier said than done. Finance ministry officials were aware of the standing that R K Talwar enjoyed in the industry, as also the limitations under the SBI Act.
So they worked out an alternative. FM called Talwar and

offered him to move as chairman of the Banking Commission that govt was to set up. Talwar's response was that he can manage the new assignment in addition to his current job.

The FM had no choice but to get back to Sanjay Gandhi explaining that due to provisions of the

SBI Act, they need to have "sufficient grounds" for removing Talwar.

#CBI was then asked to search the entire history of R K Talwar and come up with sufficient grounds that would justify his dismissal. CBI tried digging everywhere but couldn't find anything except that

Talwar routinely visited Aurobindo Ashram & it was also rumoured that he had sent out appeals to several big borrowers of the Bank for donations to the Ashram.

CBI spoke to almost each & every borrower of the Bank who had donated to #AurobindoAshram to collect evidence

against Talwar but nobody agreed to testify that Talwar had ever spoken to them or exerted influence in any other manner.

The maximum they could get was an appeal for donation signed by #IndiraGandhi, PM and #UThant, UN Secy General, which had been forwarded by Talwar.

CBI had to close the file and matter was back in Sanjay Gandhi's court.

He then ordered that the Act be amended, to do away with the requirement of "sufficient" ground.
Being #Emergency days, that was easy & the amendment was got passed by parliament w/o resistance.

With the legal backing in hand, FM called Talwar and asked him to resign, failing which he would be dismissed. Talwar, however, refused to oblige even then & left it to the FM if he wanted to dismiss him.

Such was the reputation & standing of R K Talwar that even with all
power in its hands, Govt could not gather courage to dismiss him. It rather sanctioned him leave, which he'd never asked for, for 13 mths, till the end of his term. He handed over charge & retired to Aurobindo Ashram.

The fear that was set in then persists till today.

Missing some Tweet in this thread?
You can try to force a refresh.

Like this thread? Get email updates or save it to PDF!

Subscribe to V K Jain
Profile picture

Get real-time email alerts when new unrolls are available from this author!

This content may be removed anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!