GLOBAL TRUST BANK WITH ORIENTAL BANK OF Click to edit Master subtitle style COMMERCE

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ORIENTAL BANK OF COMMERCE

Oriental Bank of Commerce is an India-

based bank in Lahore(then a city of British India, and currently in Pakistan), is one of the public sector banks in India. treasury operations, corporate/wholesale banking, retail banking and other banking business operations. under its Founding Father, Late Rai Bahadur Lala Sohan Lal.

The Company operates in four segments:

Oriental Bank of Commerce made a beginning

The period of 1970-76 is said to be3/27/12 the most

GLOBAL TRUST BANK

Global Trust Bank is a commercial bank in Uganda

which started operations in 2008. Its headquarters are located in a five-storey building on Kampala Road in the center of Ugandas capital, Kampala. insurance company Industrial and General Insurance Company Plc.

Global Trust Bank is 49% owned by Nigerias largest

The remaining 51% is owned by National Insurance

Corporation (NIC) and Ugandan individuals.

It is a consumer-focused limited liability company.

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Sequence of the fall

1999-00 - Links with Ketan Parekh. Jan 2001- GTB proposes merger with UTI. Apr 2001Deal called off after RBI steps in Gelli

ousted as CMD.

Jun-July 2001 Gelli quits board, JPC calls for probe. Jun 2001 RBI gives clean chit on GTBS liquidity. Feb 2003 RBIs assessment negative net worth of

GTB
2003-04 - Banks net worth eroded further. July 2004 - RBI rejects Newbridge Capital Infusion

Plan.
3/27/12 24 July 2004 Government notifies 3 month

Reasons for the downfall

Aggressive lending to brokers, diamond

traders.
Large quantum of non performing assets. Inadequate provisioning. Huge net loss.

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Disregarding regulations
GTBs total exposure to Parekh and his

associate co:s was Rs.250-300 crore which was above prudential limit.
In asset qualification. The provision : an asset is an asset,

whether performing or non-performing unless otherwise written off.

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Issue of Governance
Industry representatives indicated in

large numbers in the board in the name of professionalism.

Absence of
Adequate accountability Safeguards Deterrent provisions against misuse of

authority.

Leading to deterioration in
Loan quality Monitoring
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Some facts:

Why oriental bank of commerce

One of the fastest growing banks. Gross NPA : 1.73% , Net NPA: 0.72% Has one of the highest productivity and lowest cost-to-income ratio. Priority sector lending- 40%

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Assets
All legal entitlements and assets of GTB were transferred to OCB. The assets of GTB at this date inter alia included:
Property Rents and other income Office furniture Equipment Plant Investment in stocks, shares and securities Bills receivable
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Liabilities and litigations

All the liabilities, Duties and obligations of

GTB have been transferred to OCB.

The liabilities includes:
Deposits Borrowings Contingent liabilities

Scheme permits any legal proceedings by

or against GTB that remained outstanding to be prosecuted and enforced by or against OCB.
3/27/12 OBCs liability is restricted to civil claims

Deal Issues
RBI arranged a white knight for the eight

lakh beleaguered depositors of GTB.

RBI was derelict in its handling of the

Global Trust Bank.

RBI first detected GTB had a negative net

worth as long back as march 2002.

The depositors were permitted to withdraw

only up to Rs.10000 from their savings bank a/c or current a/c.

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Non disclosure of OBCS interest

OBC gave the RBI its latter of interest in

the second week of July.

This was not disclosed to investors till

July 26.
The finance minister has gone on record

to say there were regulatory lapses.

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Strategic benefits for OBC

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Advantages for OBC

No share swap. Paid-up equity capital of GTB was

adjusted towards its liabilities.

High level of non interest income. Tax benefits: GTBs large amount of

investments in NPAs estimate Rs.1.2 bn and impaired assets of Rs.3 Bn.

GTB customers could enjoy the trust of a

public sector banks.

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Managing GTBs nonperforming Assets

Main focus on:Recovering and restructuring accounts. Reaching settlements with borrowers. Filing civil and criminal actions. OCB used its strong financial position to

provide for GTBs NPAs.

Net NPAs as a percentage of GTBs net

advances.
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