|
A product of the
globalization era and bank privatization, the Global Trust Bank collapsed in end
July, 2004. Portrayed as a hi-tech bank, having 103 branches and 276 ATMs, lakhs
of depositors stand to lose their savings if not bailed out by the government.
The cause of the
collapse was the huge fraud perpetrated by its non-executive chairman, Ramesh
Yelli. This Hyderabad based tycoon who lived lavishly had a close political
friend who shielded him from all his frauds. That man was none other than the
ex-CM of Andhra Pradesh, Chandra Babu Naidu. His political links go even deepen.
He was awarded the Padamshri in 1991 by the P. V. Narshimha Rao Government when
he was chairman of the private bank, Vyasya Bank. He, together with ex-director
of the Asia Development Bank, Jayant Madhab, speculated widely in the stock
market. It has been proved that in the giant Ketan Parekh fraud, the main source
of frauds was the GTB bank.
But no one said a
word against Yelli as Naidu held the plug to the life support system of the NDA
government. The NDA came to power in 1998. Yelli became non-executive chairman
of GTB in 1999. Though it was found out that in just two years the Bank’s
capital market exposure exceeded 30% of its total assets, resulting in a
gigantic loss after the Ketan Parekh triggered the crash.
In 2001, the RBI
scuttled a merger deal between GTB and UTI Bank that could bail Yelli out of his
huge NPA (non-performing assets) liability. In March 2002 the RBI accused it of
cooking its books and forced it to change its auditors. Yet Gelli was not
touched. But the NPA time bomb kept ticking, while its capital was hopelessly
over-exceeding. Banks are required to hold a minimum of Rs. 9 as capital for
every Rs. 100/- that they lend out. When GTB was finally closed, this figure had
come down to 7 paisa.
Despite all such
fraud and loot of lakhs of depositors’ money no action was taken against Gelli.
On the contrary, the NDA government even looked favourably towards his attempt
to tie up capital from Newbridge funds - a joint venture between GE, the World
Bank and the Singapore Government.
Now, even with
Congress dispensation, instead of charging the Gelli-Naidu duo for massive fraud
the GTB is sought to be bailed out through a merger with the state owned
Oriental Bank of Commerce.
|
