IN WINTER SESSION FOLLOWING ISSUES WERE DISCUSSED IN LOKSABHA

[pankaj mody]

Following issues were discussed IN lok sabha on GTB

GTB ISSUE
After the zero hour, Ajay Chakravarthy of CPI moved a calling
attention motion on the collapse of the private sector bank, the
Global Trust Bank (GTB). Participating in the discussion, CPI(M) floor
leader, Basudeb Acharia blamed the liberalisation and globalisation
policies pursued by consecutive governments as the main reason for
these cases of virtual collapse of private sector banks. He also
criticised the governments' proclivity to always force public sector
banks to bail out such private sector banks whenever they get
themselves into trouble. It may be recalled when GTB collapsed it was
merged with the public sector bank, Oriental Bank of Commerce.
The problems for GTB began in 2001 and it almost became clear to
everyone in financial circles that the bank would collapse one day.
Alarm bells were sounded on a number of occasions; there were wake up
calls for the regulators to step in and take appropriate steps to
prevent it from virtual collapse. However nothing was done. The
question is why did the RBI not take action at the appropriate time,
questioned Acharia. He pointed out that right from 1997-98, the
advance portfolio of the bank became a source of worry. Increasing
exposure to capital market through advances meant digging its own
grave. FERA had enquired into the affairs of the bank and it was found
that funding was made to a corporate for a non-existent refinery.
Earlier, the Joint Parliamentary Committee in its report on the stock
market scam had pointed out that something was wrong with the bank.
Even the parliamentary standing committee also commented on this. So,
despite frauds being continually committed by this bank all these
years, the regulators took no action. Only when the bank was on the
verge of collapse did the ministry of finance intervene and saw to it
that GTB was merged the OCB. The non-performing assets of the GTB in
the year 2002 was more than Rs 1200 crore.
Acharia demanded the finance minister to constitute a JPC to inquire
into the affairs of the GTB and action against the person responsible
for the collapse of this bank. He also demanded that a foolproof
system must be evolved to prevent such frauds in financial
institutions in the future.