Abstract

On 24 July 2004, the Reserve Bank of India (RBI) placed a three-month moratorium on the deposits and loans of Global Trust Bank (GTB), one of India's most high profile private sector banks. RBI announced that GTB would be merged with the Oriental Bank of Commerce (OBC). The announcement came two days after the moratorium was placed. This case illustrates the challenges of banking in emerging markets and how wrong credit decisions can bring a bank down. The case also brings out the weaknesses in regulatory mechanisms in such markets.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Global Trust Bank, GTB, Oriental Bank of Commerce, Moratorium, Reserve Bank of India, Ramesh Gelli, Public sector banks, Indian economy, Unit Trust of India, Stock Exchange Board of India, Merger, Equity, Stock performance, Indian Banks Association, Shareholder