BUSINESS

Irregularities in GTB balance sheet

TROUBLE AGAIN: A disappointed depositors seen in front of a closed branch and ATM centre of Global Trust Bank at Ameerpet, Andhra Pradesh, immediately after the announcement of moratorium by the Reserve Bank of India on Saturday. — Photo: Arunangsu Roy Chowdhury

TROUBLE AGAIN: A disappointed depositors seen in front of a closed branch and ATM centre of Global Trust Bank at Ameerpet, Andhra Pradesh, immediately after the announcement of moratorium by the Reserve Bank of India on Saturday. — Photo: Arunangsu Roy Chowdhury  

MUMBAI, JULY 24. The Reserve Bank of India today revealed that it found the financial figures set out by the Global Trust Bank (GTB) in its balance sheet of March 31, 2003 to be incorrect and the Government ordered a moratorium as the RBI felt that the restructuring of financials by GTB was not acceptable.

"All kinds of options now will be available for RBI to restructure the bank including amalgamations and we need time to look at all the options. But we will see that depositors' interest will be protected", said Usha Thorat, Executive Director, RBI, at a press conference here today.

Even though the withdrawal of only Rs. 10,000 was allowed by the Government by a depositor, it allowed the bank to pay its depositor in excess of Rs. 10,000 in connection with the medical treatment of the depositor or any person dependent on him and towards the cost of higher education of the depositor or any person dependent on him for education in India or abroad. This concession will also be available to pay obligatory expenses in connection with marriage or other ceremonies of the depositor or his children or any other person dependent on him and in connection with "any other unavoidable emergency".

Ms. Thorat said though the bank reported a net worth of Rs. 400.4 crores in its 2002-03 balance sheet the RBI found in its annual inspection that the net worth of the bank was negative. In view of the very large variance in the assessment of the bank, the RBI appointed independent chartered accountants to reconcile the position. It was found that the RBI's assessment was correct.

"The recovery of NPA would have enabled them to turnaround," said Ms. Thorat. The gross NPA of the bank as on March 31, 2003 was Rs. 915.82 crores. Deposits stood at Rs. 6920.91 crores and advances at Rs. 3276 crores. The capital market exposure is Rs. 156 crores. Also, its capital adequacy ratio was negative at (-)0.07 per cent, much below the required 9 per cent.

The bank was further advised in November 2003 to take steps to raise its capital adequacy ratio to 9 per cent and indicate a time bound programme. It was also advised to raise the capital or merge with other banks. In July 2004, the bank came out with one proposal of infusion of capital and restructuring of financials. The terms were, however, not acceptable to the RBI. In these circumstances, in the public interest and that of the depositors, the RBI advised the government to declare a moratorium.

The RBI has appointed three directors — Regional Director of RBI, Hyderabad, former General Manager of Bank of Baroda and a Deputy General Manager of RBI — on the GTB board to monitor the activities of the bank. Earlier, the Government ordered moratorium on three banks — Nedungadi Bank, Banaras State Bank and a local area bank (LAB) in Gujarat. Nedungadi Bank was amalgamated with Punjab National Bank and the Banaras State Bank with Bank of Baroda.

Recommended for you