The Rise and Fall of Global Trust Bank
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : FINC038
Case Length : 16 Pages
Period : 2000 - 2004
Pub. Date : 2005
Teaching Note :Not Available Organization : Global Trust Bank (GTB)
Industry : Banking
Countries : India
To download The Rise and Fall of Global Trust Bank case study (Case Code:
FINC038) click on the button below, and select the case from the list of available cases:
Price:
For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Shipping & Handling Charges extra
» Finance Case
Studies
» Short Case Studies
» View Detailed Pricing Info
» How To Order This Case » Business Case Studies » Case Studies by Area
» Case Studies by Industry
» Case Studies by Company
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Chat with us
Please leave your feedback
|
<< Previous
"GTB had been sliding for several months now. Perhaps enough vigilance was not maintained in the past." 1
- P Chidambaram, Union Finance Minister of India.
"I would have loved to see Global Trust Bank remain as an independent entity, but in the best interests of depositors and employees this is the best decision." 2
- Ramesh Gelli, Founder Promoter, Global Trust Bank (GTB).
"It is a big relief that GTB is to be merged with Oriental Bank of Commerce. I have decided never to park any money with a private sector entity." 3
- A Depositor of GTB.
The Moratorium
On July 24, 2004, the Government of India imposed a moratorium on Global Trust Bank (GTB), a leading private sector bank, on the grounds of 'wrong financial disclosures.'
The moratorium was for three months from close of business on July 24, 2004 till October 23, 2004. Earlier, the Reserve Bank of India (RBI)4 had announced that GTB's net worth5 had turned negative as it had incurred huge losses and accumulated a significant number of non-performing assets (NPAs).6 RBI stated that the numbers reported in GTB's balance sheet did not match its audited figures. Moreover, GTB failed to provide satisfactory explanations to most of RBI's queries regarding its capital market exposures and why prudent lending norms were not observed in disbursing huge amounts for investments in the stock market. RBI said the moratorium was imposed in public interest and to protect the interests of depositors.
|
|
All operations of GTB were frozen and it was ordered not to give loans without RBI permission. It was allowed only to make payments for day-to-day operations or for meeting obligations entered into before the order.7
|
Background Note
The liberalization process initiated by the Government of India, during the early 1990's witnessed the entry of several private players in the Indian banking sector. GTB was one of the earliest private sector banks to be incorporated on October 30, 1994, in Hyderabad.8 GTB was promoted by Jayant Madhab (Madhab), Ramesh Gelli (Gelli) and Sridhar Subasri (Subasri). Madhab, a development banker, was employed with the Asian Development Bank, Manila. Gelli who was Chairman of Vysya Bank for10 years had played a major role in transforming that bank into one of India's top private sector banks. Subasri was a former bank executive and a close friend of Gelli. |
The Rise and Fall of Global Trust Bank
- Next Page>>
|
|