filing of objections to RBI- in regard to amalgamation of GTB

ASIAN AGE August 6, 2004

RBI lauded GTB’s 02-03 accounts
- By Our Special Correspondent



Mumbai, Aug. 5: Former CBI official and IPS officer Yogendra Pratap Singh has sent his
objections to the proposed amalgamation of the Global Trust Bank with the Oriental
Bank of Commerce. Objection have to be filed by August 7 to the RBI.


Mr Singh in his objection mentioned why the amalgamation is violative of several
sections of the Banking regulations Act.

Some of the objections raised are:
1) The amalgamation has to be considered after a moratorium as per section 45. But in
this case it was all done prior to the announcement, which was just a formality.

2) OBC has voluntarily agreed to the amalgamation so it should have take the approval
of two-thirds of the majority shareholders as required under section 44 of BRA.

3) Deposit insurance claim under the Deposit Insurance Corporation does not provide
for staking that claim to set off the loss to equity shareholders.

4) OBC has been guilty of violation of section 12A of the Securities and Exchange
Regulation Board of India. They have taken the entire equity on the basis of non
public information.

5) Under the Sebi takeover regulations for a bailout/merger you require at least three
offers. There should have been open offers so that shareholders get the best terms.

6) There should be accountability of the regulator.

7) RBI is meant to protect depositors and Sebi the investors, but RBI did not act in
conjunction with the Sebi.

8) There should be a CBI enquiry against the RBI officials concerned for their
collusion with GTB.


Mr Singh pointed out that the RBI took the unusual step of issuing a press release on
September 30, 2003 saying that the RBI welcomes cleaning up of the balance sheet
(2002-03) of Global Trust Bank Ltd.


He further said that,“The present management had made special efforts in the recovery
of non-performing assets relating to the previous years and have also made necessary
provisions in accordance with the Reserve Bank guidelines.


The Reserve Bank of India has noted that even though the financial statements show an
overall loss, the bank has made an operating profit for the year 2002-03.”
Then 11 months later it decides to freeze the GTB’s accounts and amalgamate the bank
with OBC because it fudged the previous year’s balance sheet.