The Hindu Business Line : GTB shareholders hope for compensation

WITH Saturday being the last day for submitting suggestions and objections to the proposed merger of Global Trust Bank (GTB) with Oriental Bank of Commerce (OBC), a number of GTB shareholders across the country have urged the Reserve Bank of India to safeguard the interests of the small and retail investors.

The appealing argument submitted by majority of the shareholders was that it would be peanuts for OBC, which is going to pay over Rs 6,500-crore to the GTB depositors, to compensate more than 95 per cent of GTB's shareholders with a meagre amount of Rs 26.72 crore.

As per the distribution schedule dated March 31, 2003, GTB had 1,43,261 shareholders, who were holding up to 5,000 shares of the bank. Of the total 1,57,129 shareholders of the bank, the small shareholders with up to 5,000 shares constitute 91.11 per cent. In the category of 5,001 to 10,000 shares, there were 7,146 shareholders, amounting to 4.55 per cent of the total number of shareholders.

The shareholders submitted to RBI that as holding of up to 10,000 shares could be considered as small holdings, then they would constitute 95.66 per cent of the total shareholders. They together hold equity of Rs 26.72 crore in the GTB's total paid-up capital of Rs 121.35 crore, amounting to a 22.02-per cent stake. As against this, large shareholders of the bank hold a 77.98-per cent stake, of which the shareholders with holdings of one-lakh and above shares alone constituted 63.68 per cent with equity of Rs 77.28 crore.

The GTB Investors' Association representative, Mr M. Sesha Rao, told Business Line that, "out of the total share capital of Rs 121.35 crore, the investment of small and retail investors is only Rs 26.72 crore. In terms of numbers, they constitute an overwhelming majority of 95.66 per cent. These small and retail investors belong to middle and lower middle class, who had put in their hard earned savings. A good number of them are senior citizens, who had invested their terminal benefits in the bank."

Pointing out the statements made by the OBC management that majority of the GTB's non-performing assets (NPAs) were recoverable, Mr Rao said, "In such a case, compensating a large number of over 95 per cent of GTB shareholders with a meagre amount of Rs 26.72 crore should not at all be a problem for OBC."

Holding the RBI also responsible for the current plight of GTB shareholders, Mr Rao said the Apex Bank had made a public statement upon the publication of GTB's results for 2002-03 that they were satisfied with the provisions made by the bank. The RBI had also praised the present management of GTB for making special efforts in recovery of NPAs.

"Further, the RBI had welcomed the cleaning up of the balance sheet by the GTB management. This made us believe that things were improving at GTB. We now appeal to RBI to take into account the background in which the hard earned moneys of small and retail investors were stuck with GTB. We hope RBI will ensure that the GTB small shareholders are adequately compensated," Mr Sesha Rao said.

More Stories on : Shareholder Activism | Mergers & Acquisitions | Private Banks

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