The Hindu Business Line : Global Trust Bank awaits RBI nod for fresh capital infusion

A DEAL for fresh infusion of capital into the cash-starved Global Trust Bank (GTB) is expected to be finalised before the end of the month along with the announcement of its annual results.

According to sources, the bank has approved a proposal from a foreign investor to bring in Rs 500 crore. The San Francisco-based, investment firm, Newbridge Capital, is the name doing the rounds.

The US private equity firm, which has been holding discussions with the bank for several months now is believed to have made an offer to pick up equity at Rs 9 a share. The offer, which has been approved by the board of the bank, awaits the formal nod from the Reserve Bank of India, said sources.

When contacted, Mr Sudhakar Gande, MD, Global Trust Bank, declined to comment.

Meanwhile, the Reserve Bank of India is understood to be ready to give some concessions to the debt- ridden bank. According to sources, the central bank is said to be ready to permit GTB to stagger the provisioning required for the bad assets of Rs 500-600 crore.

The RBI is also said to be open to permit GTB to utilise its share premium reserve to make provisions for its bad assets for which the bank has received the shareholders' approval.

The bank is also initiating an exercise to sell Rs 600 crore of its bad assets to Asset Reconstruction Company of India Ltd.

The capital infusion by the foreign investor is believed to have been delayed due to price negotiations. The bank management possibly expected a higher price, said the source. The last traded price of the scrip was Rs 12.65 with the 52-week high being Rs 36.50 and the 52-week low Rs 12.25, which is also the historic low. The all-time high touched has been Rs 114.70.

Apart from provisioning needs of over Rs 500 crore, GTB needs about Rs 300 crore merely to restore its capital adequacy to acceptable levels which is currently at zero with the RBI stipulated minimum being 9 per cent and still more capital for running the bank and for growing its advances book, which has been stunned for sometime now.

As on March 31, 2003, the bank's gross NPAs was Rs 915 crore and the total provisions were Rs 268 crore. The net NPA to advances was at as high as 19.77 per cent.

Newbridge Capital has investments in the Hyderabad-based, Matrix Labs and also the Mumbai-based, Lupin Ltd and reportedly, has investments of around $2 billion in Asia.

NewBridge's preferred verticals reportedly include banking, pharma, IT and BPO, telecom, auto components.

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