Global Trust Bank – A Case of Mismanagement

 

 

 

 

Global Trust Bank Ltd was a bank that had an independent existence until it ran into financial trouble and was subsequently amalgamated with another bank, the Oriental Bank of Commerce (OBC). The Global Trust Bank Ltd (GTB) used to provide various banking and financial services to its customers until the amalgamation was carried out in the year 2004. Some of the banking services on offer were cash credit, overdrafts, term loans, bank guarantees, letters of credit etc. Along with Visa, the GTB had also launched their Proton International Debit Card for its customers.

From a bank that was known for its robust system and good customer service, the Global Trust Bank Ltd slowly descended into various sorts of controversies and news about mismanagement with their funds and financial scams. These cast doubts about the bank’s viability as well as hurt its credibility in the eyes of the customers as well as the banking industry circles. When the bank got into a financial mess due to its large NPAs and also due to its overexposure to capital markets, the Reserve Bank of India was forced to appoint a team to investigate the matter and ascertain the actual financial position of GTB. The review exposed large scale financial discrepancies and attempts by the bank’s officials to cover up the financial problems.

As a result of the RBI team’s findings, the RBI imposed a 3-month moratorium of the bank and in a couple of days GTB was merged with the public sector bank, the Oriental Bank of Commerce. After the amalgamation of GTB with Oriental Bank of Commerce, GTB ceased to exist as an independent banking entity. The customers of GTB was taken over by OBC and provided all the services they were being given while having their account in Global Trust Bank Ltd. It was also decided that the shareholders of GTB would be given pro-rata payments in case there was any money left after the liabilities of GTB were met by means of its assets sale.

At present, GTB continues to be a part of Oriental Bank of Commerce and the original customers of GTB are getting various types of banking and financial services from Oriental Bank of Commerce.