While going about one’s day to day business, one often stumbles upon the truth. But one then picks oneself up, pretends that nothing has happened, and moves on. For some, ignorance is bliss, and knowledge is not for sharing. If to no one else, these laments of mine could surely apply to some of the banks in India. I was a banker once, and am still one at heart – if you dig seep enough.
Was I to believe that everyone who was someone at the helm of affairs at these banks – especially those dealing with international banking or staff training – was unaware of a document called the UCP (Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No.600)? Were they similarly unaware of its companion publication, the ISBP (International Standard Banking Practice for the Examination of Documents under UCP 600)? I am sure some of them must have stumbled upon these ICC publications somewhere, some day, but avoided them like they avoid a wasp? Strangely, it seems that the information was never passed on, necessary training not given, the knowledge never shared the way it ought it have been.
Well, at least that’s the impression I came away with after I met a group of bankers in early January of 2016 at Gurgaon (Haryana, India). These bankers had come from branches across India to participate in a training programme. During my sessions, they admitted that even though they were dealing with export bills and LCs for years, they knew next to nothing about the UCP. I couldn’t help but ask if they had come across LCs stating that these were subject to ICC UCP 600. Indeed they had. And their response? Absolutely nothing, they admitted. What about using their smart phones or the internet to find out what the words signified? None had not bothered to try.
I introduced the UCP to them, and showed them a copy of the original publication. It was pointless to ask if they had ever read the ICC publication. Yet, I had to. One admitted having read UCP 500 (no typo here) but had given up mid-way. The others had no idea what the UCP was about, or how important it was for documentary credit operations. The group included bankers who had served their respective banks for between three and thirty years, with direct ‘working knowledge’ between six months to twenty years in their respective foreign exchange departments.
For good measure, I checked with them about their knowledge of Incoterms 2010 and marine cargo insurance. Alien concepts, all….. I gave up.
The tragic part of all this was that every bank in India had its own training centres spread all over India. Some of these were called training ‘colleges’, often headed by very senior bankers. Every year these training establishments drew up elaborate annual training plans for courses including foreign exchange. The Foreign Exchange Dealers’ Association of India (FEDAI), too, did something similar across India. So far so good! The real problem lay elsewhere – with their ostrich-like attitude. They believed that their in-house faculty, made up of officers of the banks themselves, were good enough. The banks firmly believed that no external faculty could add further value, could bring to the table any knowledge they themselves did not already possess.
A cursory glance at their curriculum would show that, even when they took up the ICC rules for training, the course curriculum barely scratches the surface. The depth was invariably missing. Neither was enough time allotted to these topics for the participants to get a proper understanding of the subjects. May be, these training centres were in a perennial state of denial. Or, may be, they simply did not know how much they needed to know of what they did not know. For many of the faculty members, their posting as faculty was not perceived as a great opportunity to do something good, but as a punishment posting (if you can’t fit him anywhere, dump him at a training centre), or a long vacation from the stress and strain of day-to-day banking.
Most of the new generation banks in India have centralised their key operations, including that of the examination of documents, issue of documentary credits and so on. This approach has its benefits, but also limits the knowledge base to a small group.
My session with the participants I was referring to earlier, began slowly. I used the Q&A mode to highlight key issues, and later explained the solutions in detail. Using the questions as starting points, I dwelt on some of the more important UCP articles, their applications in practice, showed how these UCP articles could help them avoid the common errors and the land mines. They grew in confidence as our interaction progressed. They admitted that not knowing anything better, they had all along accepted without protest every (so-called) discrepancy claim the foreign banks had thrown at them. The best part perhaps came when I introduced the ISBP, pointing out its utility and relevance, pulled out a copy and gave them a bit of time to glance through its pages. The look on their faces told me that all my efforts had been amply rewarded. Fortunately for me, there was no other speaker to follow. I used this opportunity to continue for more than two hours beyond the scheduled close.
The flood of enquiries continued through the next morning, so much so that I had great difficulty in bringing my session to a close. The muted comments that had started the previous day swelled in intensity the next morning. They said in one voice, “All these days we had no idea that we were making so many mistakes every day. God knows what errors we must have committed in the past. Why didn’t anyone tell us!” Being able to open a few doors for my fellow bankers made my day.
This experience was not unique, by any stretch of my imagination, as the next episode and the feedback (quoted below) will show.
Sometimes in early 2013 I was to deliver a lecture at NIBM, Pune, India. I was to take two sessions as part of a week-long programme on ‘Credit management’. My theme was ‘Trade finance and ICC/RBI rules’. The participants were highly experienced, top level bankers (senior managers to general managers) from around India and abroad. I prepared my notes and presentations accordingly.
The feedback to my talk came early and fast. In spite of my best efforts I could not elicit any response or interaction from the participants. This worried me, but I soldiered on bravely. The real feedback came during the very first tea break. The course coordinator took me aside to tell me that most of what I was saying was going way over the head of the participants. Could I start from the basics? I was surprised, puzzled and disappointed. For, some of the participants had over twenty to thirty years’ service behind them; some were heads of their (credit/international) divisions for decades – all supposedly specialists in their respective fields. Yet, I had overestimated the situation. The list of participants had me fooled. Fortunately, I had all my back-up slides with me. With a broken heart I reverted to my ‘a for apple‘ spiel. Never again would I take any situation for granted, I promised to myself.
The key takeaways from this may be summed up as follows:
- The UCP was neither a popular nor an essential study. Their banks were not pro-active in facilitating the learning process. Rarely was a copy provided to the operating staff, nor were they adequately trained in its proper application. For no apparent reason, the decision-makers at these banks had not shown the required interest in creating awareness among its operating staff.
- As always, the very existence of the ISBP came as a total surprise to everyone, including the seniors on both sides of the table in the class room. (No surprises; I had seen this happen many times earlier.)
- External faculty or guest speakers are rarely, if ever, invited to speak at these banks’ training centres or to their export-import customers.
- The ICC appears to be equally accountable for not creating the necessary awareness. If the importance of some of the ICC publications had been impressed upon the front-line staff, surely some interest could have been created, some benefit may have percolated down to the bottom of the pyramid.
- Had the banks identified or addressed the training needs seriously enough, it would surely have avoiding additional costs, helped in the issue of letters of credit, the smooth handling of documents related to international trade and further improved their image abroad.
Having worked as a banker in India and overseas for more than 25 years, followed by a decade and more as a trainer, author and faculty on international trade, I may be allowed to stick my neck out and say that several banks in India, including the biggest of them all, are partners in the same crime. The unfortunate fact is that these banks simply do not seem to be seriously interested in skill development. They refuse to look beyond their internal resources, refuse to admit that relying on their in-house faculty may not be enough. They needed to broaden their horizons, look beyond their home grown resources for fresh inputs, but they rarely feel the need to do anything about it.
This frog-in-the-well attitude of some of the banks that I have come across puzzles me no end, for it defies logic. It’s no wonder the quality of their documentary credit operations continue to a source of frustration for the trading and the international banking community.
(First published on LinkedIn on 02 March 2016)
[The opportunity is still available to improve the situation, if they are willing to.
Further, Incoterms 2020 is right around the corner. How are the banks in India or elsewhere (or the exim traders for that matter) gearing themselves up to ensure that the concerned staff across all their offices are trained within the shortest possible span of time?
Are you ready for tomorrow’s world? ]
For information related to training in UCP, Letters of credit and Incoterms 2020 contact us.