The Hindu : Front Page : Global Trust Bank to be merged with Oriental Bank of Commerce

Online edition of India's National Newspaper
Tuesday, Jul 27, 2004

Front Page

Front Page

Global Trust Bank to be merged with Oriental Bank of Commerce

By Oommen A. Ninan

— Photo: K.R. Deepak

THE SMILE IS BACK: A customer with the cash drawn from a Visakhapatnam branch of Global Trust Bank on Monday.

MUMBAI, JULY 26. Reserve Bank of India (RBI) today announced its intention to merge the troubled Global Trust Bank (GTB) with the public sector Oriental Bank of Commerce (OBC).

"Oriental Bank of Commerce came on their own and there are lot of synergies," Usha Thorat, Executive Director, RBI, told newspersons here today, while announcing the proposed merger. The draft scheme for amalgamation of GTB with OBC has been forwarded to both the banks today and they have been given time till August 7, 2004 to consider it.

The moratorium on GTB, which was announced on Saturday afternoon by the Government, will continue till the scheme is approved by the Government and notified. At present, the depositors are permitted to withdraw only up to Rs. 10,000 from their savings bank account or current account or any other deposit account through any of the branches of the Bank. However, Ms. Thorat said, RBI was open to increasing this limit. "Nothing prevents us from hiking the limit at a later date," she added.

Emergency cash

Earlier, RBI stated that cash withdrawal up to Rs. one lakh would be allowed with its permission for any emergency — for medical treatment, children's marriage or for higher education

On the salary accounts with GTB, Ms. Thorat clarified that these would also come under the permitted limit of withdrawal of Rs. 10,000 but the Bank would allow these organisations to open alternative accounts in any other bank. The draft scheme also proposes that all GTB employees be retained by OBC on the same terms and conditions.

RBI stated that GTB had been given time to arrange for the infusion of capital as also to explore the options of raising the required capital or the voluntary merger with any domestic bank. GTB's proposal for the infusion of capital by a consortium of investors was not found acceptable. The Bank also indicated its inability to raise the required capital from domestic investors as also voluntary merger with any domestic bank. "The option of voluntary merger is not available now," RBI asserted.