The little-known story of once-private Syndicate Bank, which started with a 25-paise deposit is worth reading as it tells you how small ventures became big initiatives and we do suggest that this story be a part of the business management school curriculum which in turn will help to get more of ethical businessmen rather than materialistic lobby in the market. This story is going to give a lot of booster to budding entrepreneurs.
There are three reasons why Syndicate Bank is important in the evolution of
India as a wealth generator, and for working towards the upliftment of the
masses.
in the 1930s Manipal was still a village.
At a time when all banks insisted on Rs 5 as the minimum deposit amount to
open an account, Syndicate’s promoters opened accounts with just 25 paise.
Unfortunately, this is a story that most management schools to do not
teach.
The bank itself was a brainchild of Tonse Madhav Anant Pai, who went to
Bangalore to study medicine.
He excelled in his studies, and
when earning his licence to practice medicine, he went back home to the fishing village of Malpe.
He asked his parents if he could go to Japan for further studies, but was
told sternly by his mother that he should stay in the same village and
practice medicine for the welfare of the people he grew up with.
That broke the boy's heart. He wanted to study more. And he knew that a fishing village would provide him neither money nor the intellectual
challenge.
He was proved right. In six months' time, he confirmed that the fishing village had only colds,
fevers, diarrhea, dysentery, and indigestion as regular ailments.
He tried persuading his parents one more time to let him go overseas for
further studies.
Once again, he was rebuffed. His relatives would talk of how the boy would
go to sleep sobbing into his pillow crying over
the unfairness of life.
Till one day, he had his Eureka moment.
He realised that one reason why he was not earning enough was because the
people around him were also not earning enough.
He began strategizing a social revolution that India had never seen or
imagined.
He knew, as a doctor, that children are brought to doctors invariably by
mothers; seldom by fathers.
So he focussed on the women who came to him.
He began urging them not to
let their children end up like their fathers who were good only for fishing
and then getting drunk when there wasn’t enough money for saving. He
would then ask them to show how much money they had. They would show him a
few coins. He would gently take a 25 paise coin from each woman and tell
her to start with this.
Since he was not a bank, he kept two notebooks for each woman
– one kept with him and the other with the woman.
He told them that he would send his compounder over to her house every day
when the husband was not around. If they could save 25 paise, the amount
would be registered in both the notebooks.
The scheme, backed by constant
persuasions and exhortations worked.
Women began saving. In a few months, Pai realised he had more than a
thousand rupees – which translates into a few lakhs using today’s
valuations.
The 25 paise deposit scheme came to be known as the Pygmy Deposit scheme.
It was time to go to phase 2 of the plan.
He told them that their children were falling ill very frequently because
they consumed only fish and rice.
He urged them to give the children a glass of milk every day.
That was impossible.
A glass of milk was unaffordable.
So Pai urged them to buy a cow for their houses.
They laughed: "We cannot afford a glass of milk, and you want us to buy a
cow?".
But Pai gently told them that he could finance the cows for the women.
And repayment was also painless, he explained: "Just give your child
a glass of milk and I shall purchase the rest of the milk from you and
adjust the cost of the cow. You don't have to do anything else."
It took a while to persuade the first woman. But when she agreed, it was a
game of "me too".
Within a short while, there were so many cows in the village that Pai could
not purchase all their milk. He, therefore, formed a milk cooperative.
To handle the amount of money coming in he started a bank -
Canara Industrial and Banking Syndicate Ltd - with its headquarters in
Manipal.
The first branch of the bank started its operations in 1925 at Udupi in
Karnataka. By 1937, it had secured its membership as a clearinghouse in
Mumbai.
He then started weavers’ cooperatives, who too was financed by the bank.
Then to benefit the community he began schools, then colleges and then
institutions that taught engineering and medicine. This complex later
became the prestigious Manipal Educational Complex.
In fact, to grow the bank, Pai used to look around for good businessmen,
who had the urge to grow and both the ability and willingness to repay the
amounts borrowed.
In one of his travels, he met a trader, whom he helped get a yarn licence
from the government. And helped him in many aspects to growing his business..
That businessman's name was Dhirubhai Ambani and the rest is history.
We take the opportunity to salute the founder of Syndicate bank and hope that such real businessmen become a reality in present world too and with this small story tracing history of Syndicate bank, we suggest you better fill your email in the subscription box to avoid missing out on
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