GTB waits for Manic Monday

“We had given them enough time to restructure their balance sheet. Their capital adequacy ratio was in the negative. They managed to find a new partner but their terms and conditions were not acceptable to us,” says Usha Thorat, Executive Director of RBI.

Though the bank identified one foreign equity investor recently, its terms and conditions were not acceptable to the RBI. Public sector banks were not keen on bailing out GTB through the merger route. Reason: lessons from the bad experience of the Punjab National Bank-Nedungadi Bank merger.

GTB has said it will abide by the RBI guidelines and work towards protecting the interest of its depositors. It has a deposit base of Rs 6,920 crore and 8 lakh depositors.

GTB MD Sudhakar Gande clarified that the appointment of three RBI directors on the board did not mean that RBI superceded the GTB board. It will strengthen the bank in finding out proper solutions at the earliest. Gande admitted that GTB’s networth has eroded drastically.

Sebi said broking firms holding clearing accounts with GTB would not face any problem. “We have discussed the issue with the stock exchange, Mumbai and NSE and they have assured there will not be any difficulty in pay-in and pay-out for the stock trades,” Sebi Chairman G. N. Bajpai told agencies.

Meanwhile, RBI assured that demat accounts and safe deposit lockers of customers in the bank will operate as usual.