Mumbai, July 26
The troubled Global Trust Bank (GTB) will be merged with the Oriental Bank of Commerce (OBC), the Reserve Bank of India (RBI) announced on Monday. The decision follows hectic activity in the corridors of the Ministry of Finance in the Capital to save the bank following negative reserves, sources here said. The RBI and the Securities and Exchange Board of India would oversee the merger so that it is completed quickly, RBI executive director Usha Thorat said in a statement here.
“Whatever action has been initiated is for the protection of the depositors' interest,” she told reporters here.
Details of the merger are being worked out and would be put out for public scrutiny till August 7.
There will be no swap arrangement for the GTB shareholders when the private sector bank is amalgamated with the Oriental Bank of Commerce (OBC), according to reports.
The OBC said it had made the offer to merge GTB with itself as it perceived synergy between the two banks. The OBC gets customers from the GTB and its branches, many of whom are based in south India where the state-run bank has a limited presence.
The two banks also share a common technology platform. “There is a terrible amount of synergy between the two banks. We are a north-based bank and they are a south-based one. We should be able to clean up the books in a very short time,” Oriental Managing Director B.D. Narang told reporters.
The Centre had on July 24 placed the crisis-ridden Secunderabad-based GTB under moratorium for a three-month period till October 23, partially freezing its operations following ‘wrong’ financial disclosures.
The moratorium imposed by the RBI on the GTB would definitely stay in force until August 7, Ms Thorat told
reporters. Depositors may withdraw more with RBI approval for emergencies, such as medical and education costs. “There was no limit on such withdrawals but in the previous moratorium cases, the RBI allowed up to Rs 1 lakh to be taken out,” Ms Thorat
said.
