FROM THE REPORT ISSUED BY
ALL INDIA BANK EMPLOYEES’ ASSOCIATION, CHENNAI
1. On 24th July 2004(Saturday) GTB was put under moratorium, 25th July 2004 was a Sunday when the Government, RBI and OBC do not work. Strangely on 26th July 2004 (Monday) the announcement came that GTB would be taken over by OBC. How and why in such a hurry the decision was taken ? In the past also, many private banks had collapsed. The Government took nearly 3 to 6 months to decide about the merger with another Bank. Now, how, within 48 hours, the merger decision was taken ?
2. If a Bank is to be taken over by another bank, proper valuation of assets and liabilities should be made. OBC did not and could not have done this valuation exercise within a day. Why this merger was forced on OBC overnight and by whom ?
3. OBC is private sector bank but there are private share holders and their representatives are on the Board. Whether its Board meeting was held before the decision was announced ?
4. Joint Parliamentary Committee reports clearly indicated the involvement of GTB in Ketan Parekh Scam. RBI was fully aware of this. Ramesh Gelli stepped down as Chairman of GTB in 2001. But why RBI did not take serious action when signals were clear that things were not alright with GTB.
5. Now RBI says that they were aware that GTB was not doing well. Why the depositors were not alerted and why no preventive action was taken by RBI ?
6. The Annual Report of GTB as on 31.03.2002 showed a net worth of Rs.400 crores and net Profit of Rs.40 crores. But RBI inspection revealed that GTB’s net worth was negative. What was the action taken by RBI over this serious falsification ?
7. GTB’s Balance sheet for the year ended 31.3.2003 also shoed positive net worth. But in September 2003, the RBI inspection report again found that the net worth was negative and capital adequacy was zero. Why then RBI did not take steps to stem the rot ?
8. Now the Government says that GTB was sliding for some years. The Bank was dealing with people’s money (Rs.7000 crores of depositors) and yet why Government did not intervene earlier in the interest of the depositors ?
9. There are serious allegations that Ramesh Gelli and GTB colluded with Ketan Parekh and his associate broker firms to artificially boose the price of GTB shares on the eve of proposed merger with UTI Bank. Why no criminal enquiry is being conducted in this conspiracy ?
10. As a result of involvement of Ketan Parekh associates in the manipulation of GTB share prices, SEBI had clamped a ban in December 2002 on these brokers from dealing with the shares of GTB. Suddenly on 11-6-04, this ban was lifted by SEBI. What was the reason for this action of SEBI ? A serious investigation is necessary.
11. In a recent reply to the Parliament, the Government has said that these brokers had recently offloaded their shares in GTB.
Ashok Mittal & Co - 15.37 lac shares
Claridges Investment & Finance – 7.33 lac shares
European Investments – 46.65 lac shares
Far East Investment – 55.25 lac shares
Is there not an obvious link between the sudden removal of the ban and the offloading of the shares ?
12. The Government also stated that the promoters had also offloaded their GTB shares as under
Ramesh Gelli - 21.67 lac shares
Premkala Gelli – 22.56 lac shares
Girish Gelli – 9.55 lac shares
Annapurna Sridhar – 14.86 lac shares
Thus it is clear that by selling nearly 70 lacs of their shares the promoters pocketed about Rs.7 crores and dumped this loss on the unsuspecting investors. It is notable that the promoters shares were sold by them even after the declaration of moratorium on GTB. Why and how the promoters were allowed to sell these huge shares after the Bank was closed and who has purchased these shares ? Does it not require a proper investi- gation ?
13. How certain share broker came to know in advance about the closure of GTB which enabled them to sell their shareholdings and save their investments, while the general public has lost their investments in GTB. Is it not to be investigated ?
14. Interestingly, in the last three months prior to closure of GTB, the shareholding of FDI, FII, NRI got reduced as under:
Foreign Direct Investment : 15.62 to 7.68 %
Foreign Institutional Investment : 4.91 to 0.98 %
NRI investment : 8.89 to 4.94 %
FDI, FII & NRI : 29.42 to 13.60 %
How did they come to know that GTB is facing closure and redressed their share
holdings ? Obviously there had been a leak out and connivance. This also requires a probe.
15. At the same time, the shareholding of the general public has gone from 44 % to 53 %. This means the general public has been made the scape goat. Is it not a deliberate case of cheating the common investors ?
16. Before the Joint Parliament Committee that investigated into the Ketan Parekh Scam, SEBI confirmed that the price of GTB shares were manipulated during the period October 2000 to February 2001. Mr.Gelli also deposed before the JPC that he did not tatally rule out that there could have been rigging in the shares of GTB. But despite this, the then BJP-NDA Government did not take any action. Why ?
17. It is now clear that the Balance Sheet of GTB for the years 2002 and 2003 years were manipulated and falsified. But why no serious action is taken on the auditors, Love, Lock and Lewis and Prive Water House Co ? Why their licenses should not be cancelled by the Institute of Chartered Accountants of India ?
18. In the Harshad Mehta Scam in 1992 Vysya Bank was allegedly involved when Ramesh Gelli was its Chairman. It was reported that Vysya Bank lost Rs.1000 crores. Still he was allowed to float the GTB which was also involved in another scam in 2001 involving the speculator Ketan Parekh. Does it not reflect poorly about the role of RBI in permitting undesirable persons to head the Banks ?
19. out of total advances of Rs.3200 crores in GTB, 20 % of the advances were bad loans and NPAs i.e. more than Rs.1500 crores. The actual NPAs could be much more because there are reports of ever-greening the NPAs and disguising them as performing advances. Who are the defaulters ? Who have not repaid their loans to GTB ? Why their names are not published ?
20. The Bank had a huge exposure to capital market i.e. around Rs.1600 crores. Ketan Parekh alone was given more than Rs.200 crores. Why RBI failed to stop this raising exposures well in time ?
21. Ramesh Gelli himself has confessed that he has reduced his holdings in GTB from 7.5 % to 3.5 % in the recent months. He should have been aware that the Bank was collapsing but in a wise move, he reduced his shareholding and dumped it on the gullible investors. Is it not open cheating ?
22. The Chairman of JPC, Mr.S.P.M.Tripathi had said that JPC felt that there was definite evidence of misappropriation of funds. SEBI had also observed that the huge loans given by GTB to Ketan Parekh’s linked companied – Zee Telefilms and Himachal Fururistic Communications Ltd. Even after these revelations, why the RBI and Government kept mum ?
23. Today, after the collapse of GTB, the value of share is nil. There are about 1,50,000 shareholders. The amount invested by these retail investors is a loss to them. They could not get anything at all because of the deliberate negligence of the promoters.
24. Total capital of the GTB was Rs.104 crores. 53 % of this was investment by general public. This means, the common investors have lost more than Rs. 50 crores. Is it a not a daylight robbery ?
25. The GTB is guilty of mismanagement, poor governance and fraud on the people. But why RBI has protected GTB, its promoters and corrupt officials ?
26. The GTB suffered a loss of Rs.272 crores as on March 2003 and another Rs.812 crores as in March 2004. Today in the name of merger with OBC, public sector has been saddled with this private loss. Why ?
27. It is reported that GTB has a total of Rs.1500 crores of bad loans. One does not know what is the real figure because lot of manipulation is alleged. All these bad loans of private sector are today put on OBC, a publc sector Bank. Why ?
28. OBC is today a 0 % net NPA Bank. Overnight its NPA has gone up and its rating has come down. Why should public sector suffer for the misdeeds of private sector ?
29. Why no action has been initiated against those responsible for these bad loans ? Why is it hushed up by simply transferring the NPAs to OBC ?
30. Public Sector Banks are people’s institutions run with tax payer’s money. Why the GTB loss of Rs.1000 crores and NPA of Rs.1500 crores be borned by the ordinary tax payer ? Is it not a national loss to the public exchequer ?
31. If private sector is so efficient, why this GTB could not be taken over by another efficient (!) private sector bank or a private corporate business house ? Why are they eyeing on profitable public sector units only ?
32. Finally, the hurriedly announced merger schemes provides that no suit or other legal proceedings shall lie against the Central Government or RBI for anything done in pursuance of the scheme. Why this immunity ? Why RBI is trying to shield itself ? RBI cannot to subjected to public scrutiny for it lapses ?
33. coming back to Govt.’s swift action to merge GTB with OBC, it is claimed that was taken in public interest. But everyone knows that the GTB was dealing with lot of share brokers and demat accounts. It is alleged that only to rescue the share market brokers, the hurried merger decision was taken.
34. It is reported that while the merger decision was announced on 26.7.2004, the actual cabinet approval for this was taken only a few days later. What was the hurry ? why the Govt. is so much scared about the share brokers and manipulators ?
35. In the recent budget also, the Turnover Tax was announced but when they threatened the Govt., Finance Minister rushed to Mumbai and announced that this tax would be withdrawn. It is very clear as to who is calling the shots.
