The Hindu Business Line : GTB placed under 3-month moratorium <br>RBI permits withdrawals up to Rs 10,000; appoints 3 directors

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GTB placed under 3-month moratorium
RBI permits withdrawals up to Rs 10,000; appoints 3 directors

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Mr Sudhakar Gande, Manging Director, Global Trust Bank, coming out of his office chamber to address the media in Hyderabad on Saturday. - A. Roy Chowdhury

Mumbai , July 24

THE Government on Saturday froze all operations, save for the most necessary, of the Hyderabad-based Global Trust Bank (GTB) for three months. Depositors, however, have been allowed to withdraw up to Rs 10,000 during the freeze.

An order of moratorium issued by the Government, effective from the close of business on July 24 up to and inclusive of October 23, restricts the bank from granting fresh loans or undertaking any other banking operations.

Ms Usha Thorat, Executive Director, Reserve Bank of India, said the regulator asked the Finance Ministry to pass an order of moratorium in respect of GTB after it found terms of a capital infusion and restructuring proposal from the bank unacceptable. The order has been passed in public interest, in the interest of depositors and the banking system, Ms Thorat told newspersons here.

Though withdrawal of deposits has been restricted and the bank's automatic teller machines already disabled, RBI will allow depositors who need money for medical treatment, marriage, education or any unavoidable emergency to draw funds up to Rs 1,00,000. However, she said it is difficult to make a commitment on large deposits.

All money, forex and securities market transactions that the bank has entered into up to close of business on Saturday will be honoured.

Ms Thorat said the RBI is considering alternative arrangements to rehabilitate the bank. "We are considering various options, including amalgamation of GTB with another bank. I cannot give you any details. All I can say is that depositors' interests are paramount to the RBI," she said. Asked whether the RBI would consider if the promoters were to submit a new proposal, she said, "I cannot see why not."

Reading out a statement, Mr C.R. Muralidharan, Chief General Manager, RBI, said GTB submitted a proposal in the first week of this month for capital infusion and restructuring. "The terms and conditions were not acceptable to the RBI," Mr Muralidharan said. He, however, declined to give details of the proposal given by the bank.

Ms Thorat said RBI has appointed three new directors — the RBI's Regional Director at Hyderabad, an RBI Chief General Manager at Hyderabad and a retired chief general manager of Bank of Baroda on the bank's board. The RBI's current Regional Director at Hyderabad is Mr G. Padmanabhan.

Ms Thorat said RBI is not contemplating any action against the directors or promoters. Asked whether the RBI would lodge a complaint against the bank's auditors with the Institute of Chartered Accountants of India, Mr Muralidharan said the RBI is considering it. The regulator had complained to ICAI about GTB's previous auditor, which ratified accounts that an RBI inspection later found rather inaccurate.

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