The Tick Mark That Took Courage

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"There are accounts that turn bad because of weak financials. And then there are accounts that turn bad because powerful hands reach in from outside and deliberately break them. The banker's duty is to tell the difference — and to say so, in writing, with courage."

Of all the extraordinary accounts I encountered in my decades in credit administration, one stands out as a case study not merely in banking, but in the collision of politics, institutional courage, and industrial legacy. It is the story of Company H — a manufacturer of heavy-duty power transformers — and of a Chairman whose bold signature on a handwritten office note remains one of the most memorable acts of conviction I witnessed in my entire career.

1. The Strategic Importance of Company H

Before understanding the crisis, it is important to appreciate just how vital Company H was to the Indian economy. Power transformers are not optional infrastructure. Every electricity board that generates power requires transformers to step up or step down voltage before electricity can be distributed to homes, hospitals, factories, and farms. Without reliable transformers, power cannot travel. In this strategic sense, Company H's product line was not a commodity — it was a matter of national importance.

The company had earned an outstanding reputation. The Tamil Nadu Electricity Board, Andhra Pradesh Electricity Board, and Odisha Electricity Board were among its regular institutional clients. Each transformer was custom-built to specification — a complex, high-precision job that often required a lead time of six months or more from order to delivery. As was customary in the industry, electricity boards made advance payments backed by bank guarantees to fund the long fabrication cycle — a perfectly rational commercial arrangement, mirroring the capital-intensive nature of industrial production.

2. The Invisible Hand: Political Weaponization of Credit

This is where the story takes a dark and deeply troubling turn — and where the humanity of one man became the trigger for an institutional crisis. The director of Company H was a person of rare moral courage. When a prominent national opposition leader — a towering and principled political figure of that era — fell critically ill and required frequent kidney dialysis treatment at Christian Medical College (CMC), Vellore, this director did not hesitate. He personally hosted the leader at Vellore, bearing all the expenses of treatment, hospital care, and lodging entirely out of human solidarity and deep personal conviction.

This act of hospitality, noble as it was, carried devastating consequences. The opposition leader was becoming a formidable political force whose reform movement was drawing millions across the country. The ruling establishment, deeply unnerved by this groundswell of popular support, was furious. The director of Company H — by standing beside the ailing leader, facilitating his medical care, and hosting him with dignity — had effectively crossed a political red line. The wrath of the ruling regime and the administrative machinery now turned directly toward a vulnerable target: Company H itself.

As I came to understand through discussions between our Chairman and the Company's Chairman, what followed was systematic and orchestrated. Indian Bank — which had been financing Company H — was reportedly contacted over the phone and instructed to arm-twist the company: to freeze credit lines, to not release funds, and to apply maximum financial pressure. The state electricity boards were contacted separately — through direct administrative directives from high political offices — and instructed to withhold overdue payments from Company H, even where dues were contractually obligated and fully certified.

The effect was swift and devastating. Deprived simultaneously of its working capital credit lines and its receivables from government-owned electricity boards, the company's liquidity collapsed. Production was impaired. Finished goods piled up in warehouses, unsold and undelivered. And as the company was unable to fulfill its contractual obligations, bank guarantees issued for advance payments were invoked by the electricity boards — the same boards that had conspired, under political direction, not to pay the very company whose performance was being questioned. It was a perfectly executed financial strangulation — invisible in its design, devastating in its effect.

3. The CMD's Cabin: An Unusual Instruction

Against this backdrop, I received a summons I will never forget. Our CMD called me and my immediate superior to his cabin. He explained that he had been informed — reportedly on the advice of a Deputy Governor of the Reserve Bank of India — that our bank should step in and take over the outstanding dues from Indian Bank. The account would be taken over through a direct payment from our bank's Mount Road Branch, and we would then begin managing the relationship freshly. He asked us to prepare a note for sanction urgently, which he would approve within his delegated powers.

I returned to my desk. I went through every document — the financials, the invoked guarantees, the debtor position, the production status, the outstanding from electricity boards. And the more I studied, the more deeply uncomfortable I became. This was not a normal restructuring situation. This was a unit with multiple simultaneous injuries: invoked guarantees, blocked receivables, impaired production, a hostile political climate, and no clear path back to viability.

4. The Dissent Note: Writing the Uncomfortable Truth

The note was required urgently. Sitting at my desk, I took four sheets of plain white paper with a carbon copy and began writing — by hand — a detailed analysis of why our bank should not touch this account. By the time I had finished, I had documented nearly twenty separate and substantive weaknesses, each grounded in credit fundamentals, policy norms, and risk realities. The note argued, without equivocation, that we should not touch this unit even with a ten-foot stick. It was, I fully understood, an embarrassing document to submit up the chain. My immediate superior was personally summoned and asked to produce it. He handed it over.

5. The Tick Mark That Changed Everything

The Chairman read my note in full. And then, from the bottom-left corner to the top-right corner of my handwritten pages, he drew one large, sweeping tick mark. Beneath that diagonal mark, in his own handwriting, he wrote: "All observations made are perfect. I cannot agree more. Nevertheless, I hereby accord my approval. Please arrange to pay Indian Bank the full outstanding, take over the unit, and collect all the securities." He signed below with his full signature — A.M.K.

I was perplexed. My colleagues were baffled. Here was a Chairman — universally known for his extreme conservatism in credit matters, a man who would ordinarily not have touched such an account with a twenty-foot stick — fully agreeing with every one of my nearly twenty objections and then ordering the takeover anyway. In that moment, I understood something important: there are decisions that transcend balance sheets. The Chairman had assessed the political dimension, the larger institutional obligation, and perhaps the human cost of letting a strategically important national industry collapse. He made his decision not in defiance of sound banking principles, but in full acknowledgement of them — and with the moral clarity to own the consequences.

6. The Long Struggle: NPA, BIFR, and Eventual Recovery

The account was taken over. And as I had warned, it immediately sat in our books as a Non-Performing Asset (NPA). What followed were years of painful, grinding effort. The bank had very limited room to release fresh funds. Invoked bank guarantees had to be accommodated within the outstanding. The company went from pillar to post among the electricity boards — institutions that genuinely wanted fresh transformer supplies but refused to settle their historical dues. In an extraordinary situation, the bank had even purchased supply bills without acceptance — an exceptional measure that illustrated just how far the bank had stretched to keep this account alive.

Eventually, the file landed before BIFR. I attended several of those hearings in Delhi. After examining the financials, BIFR recommended that the company liquidate certain fixed assets to regularize dues and continue liaising with the electricity boards and state governments — the very administrative stakeholders whose earlier directives had triggered the liquidity freeze. Time, however, turned out to be an ally. As the political landscape shifted, the pressure on the electricity boards eased. The company fought back, dramatically improving its position. Some fixed assets were monetized. The associate group concern — an engineering firm known in the market — also performed well and provided partial financial support. The account, which had seemed terminally wounded, gradually stabilized.

7. From Tyre Boys to Industrial Icons: The Royal Enfield Legacy

No account of Company H would be complete without a tribute to its founding family — and their story is one of the most extraordinary in Indian industrial history. Sri Easwar Iyer, the founder of Company H, began his working life as a young helper boy at the British-owned Royal Enfield Cycle Company on Broadway, Chennai, alongside his associate Sri Sundaram Iyer. In the autobiography that I was privileged to read, the very first job described is breathtaking in its humility: as boys, their task was to blow air into the tyres of the cycles that the company sold. They stood on the footpath on Broadway, pumping bicycle tyres by hand, earning their daily wage.

But what the British owners saw in these two young men was something money could not manufacture: an energy, a conscientiousness, and an enthusiasm that set them apart. They were efficient, active, and utterly dedicated. When the time came for the British to unfold from India, they made a decision that would shape Indian industrial history — they handed over the company to these very boys. Sri Easwar Iyer and Sri Sundaram Iyer accepted the responsibility and carried it far and high.

What followed was one of the great entrepreneurial success stories of independent India. Together, they built Royal Enfield into an icon. The Bullet Motorcycle became a symbol of endurance, authority, and character across the nation — and, crucially, the preferred choice of the Indian Army, which remains one of Royal Enfield's largest institutional buyers to this day. That heritage of trust, discipline, and quality — built by founders who once pumped tyres on a footpath in Broadway — was the same cultural DNA that ran through Company H. In later years, due to family alignments and succession matters, Eicher Motors acquired a dominant interest in Royal Enfield. The rest, as they say, is history.

8. A Chairman Remembered: Sri A.M. Kadiresan of IOB

A word must be said about Sri A.M. Kadiresan, Chairman of Indian Overseas Bank (IOB), under whom we all worked during this period. I do not think any CMD known to me would have taken such a bold decision — to take over a badly bruised, heavily bandaged account from another bank — and done so with such complete transparency and conviction. He retired with grace and glamour. In the banking press of that era, a write-up appeared that I happened to read, which captured his reputation in one memorable line: "Sri A.M. Kadiresan is the only Chairman about whom there are no allegations, no accusations, and no complaints." Under his leadership, IOB stood first in disbursing IRDP loans, Direct Agricultural Loans, and Priority Sector advances, and recorded high profitability ratios. I feel proud and privileged that I had the opportunity to interact with him closely throughout this period.

The tick mark on my note — that single sweeping diagonal from the bottom-left to the top-right corner of four handwritten pages, followed by that extraordinary disposal — remains the finest example I know of institutional courage combined with complete intellectual honesty. He agreed with every objection. He agreed that every weakness I had identified was real. And still, he decided. And he signed his full name — A.M.K. — to it. No other Chairman I ever worked under would have done the same.

Epilogue: A Dedication

To whom do we dedicate this story? To the courageous director of Company H — the man who did not hesitate to welcome an ailing national opposition leader as his personal guest at CMC Vellore, who bore the full cost of his medical care, and who faced the severe political backlash of the state machinery for a simple act of human solidarity. He knew what he was risking. He did it anyway.

And to Sri Easwar Iyer and Sri Sundaram Iyer — who began their journey blowing air into bicycle tyres on a footpath in Broadway, Chennai, and built from that humble beginning one of the most iconic brands in Indian industrial history. And to Sri A.M. Kadiresan, who demonstrated that a banker's character is ultimately more important than any credit policy manual ever written. These are the men who make institutions worth remembering.

Key Credit & Policy Lessons

• Political Risk Is a Credit Risk: When political actors can direct banks and public-sector buyers to simultaneously withhold credit and receivables, the resulting liquidity collapse is indistinguishable from a credit failure. Lenders must develop frameworks to identify and document politically-induced stress in large accounts.
• Bank Guarantee Exposure on Long-Cycle Manufacturing: In industries with long fabrication lead times (six months or more), bank guarantees issued for advance payments carry elevated invocation risk when buyer-side cash flows are suddenly withheld. The exposure must be stress-tested for political and counterparty non-payment scenarios.
• Dissent on Record: A well-argued, structured dissent note — even if overruled — serves as a critical institutional safeguard. It documents the credit officer's professional judgment, clarifies the nature of the risk being accepted, and creates accountability at the appropriate level. Never suppress an honest credit opinion.
• Sovereign/PSU Counterparty Risk: Exposure to government-owned electricity boards as counterparties carries latent sovereign receivables risk. Delays in settlement by PSUs can trigger cascading defaults across the entire supply chain. Banks must assess receivable concentration in PSU debtors.
• The Promoter's Character Endures: Across this long and painful period, the integrity and determination of the founding promoter family was a decisive factor in keeping the unit operational. Character, built over decades, is the most durable form of credit collateral.