2. CONTENT
1. Introducation of GTB
2. Ramesh Gelli, The Founder
3. First Sign of Trouble
4. GTB Collapse Reasons
5. Intervention of SEBI
6. Merger with OBC
7. Conculsion
3. INTRODUCATION OF GTB
GTB was founded on 21 october 1994 and
commenced operations at secunderabad.
Founders : Ramesh Gelli, Srider Subasri
and Jayant Madhob.
On the first day of its operations it collected
Rs. 100 Crores.
GTB was involved in the stock market scam
of 2001, that the stockbroker Keten Parekh
ran.
14 August 2014 GTB merger with Oriental
Bank of Commerce (OBC).
4. RAMESH GELLI, THE FOUNDER
The Chairman and Managing Director
(CMD) of Vysya Bank and was a founder of
GTB.
Gelli is an engineering graduate from
Osmania University.
Gelli worked at the Andhra Pradesh State
Finance Corporation and bharat Heavy
Electricals Ltd.
He was awarded the Padmashri and Udyog
Ratan by the Govt. of India in 1990.
5. FIRST SIGN OF TROUBLE
In 2000, GTB fell short of capital fund.
In mid-2000, GTB disbursed loans of Rs.
1.4 billions to Ketan Parekh.
GTB Credit Decision Process fall Weak.
In 2001-02, bank suffered almost 60 percent
fall in Net Profit .
GTB Share Price :
In 2001 : 25.70
In 2014 : 3.60
6. COLLAPSE REASONS GTB
Loans against shares as security, turned
into bad debts with fall in the stock market.
False Auditing of Financial statements.
High NPA’s due to indiscriminate lending
and gross under provisioning for NPA’s.
Bank direct exposure to capital market was
around 24% of advances in fiscal year
2000-01, while the capital is 5% according
to SEBI guidelines.
7. INTERVENTION OF SEBI
Bank was probed by RBI , SEBI and Joint
Commission on alleged stock scam.
Promoter Gelli was banned from SEBI for
conducting any stock transaction.
Foreign stake also Decreased by SEBI.
Girish Gelli , Former Chairman and Director
sold 849238 Shares of the bank.
All 40 Million Shares were sold within first
week of month.
8. MERGER WITH OBC
On 26 July 2004 RBI announced GTB merged
with the OBC.
It Acquired all 104 branches of GTB, 275 ATMs,
1400 employees and 1 million Customers.
Estimated merger cost of Rs. 8 billion.
There was no Share Swap between GTB and
OBC.
OBC enjoyed a huge Tax Break by acquiring
GTB’s NPAs worth Rs. 1.2 billion and impaired
Assests of Rs. 3 billion.
9. CONCULSION
The unethical Practices of the Promoters and the
Lethargic attitude of the Regulator by not reacting
on time all seems to have together brought down
the bank and its investors.
The bank ran into the colossal because of several
role players enacted to suit their convenience
which, ultimately led to the suffering for small,
unwary and gullible investors who had to pay a
heavy price.
