FINANCIAL ETHICS

Where trust was the victim

There was euphoria in the post-liberalization era. The liberalization of the Indian economy in1991 opened the banking sector to private enterprise. well-known financial institutions such as HDFC, ICICI, UTI etc. began their operations in commercial branches, with their reputation fully backing them. Ramesh Gill, Sidahar Subasri , and Jayant Madhod were the three big promoters of the newly founded Global Trust Bank (GTB). On its opening day , on 30 October 1994 ,its collection was record RS. 100 crore of deposits . GTB’s bang catapulted them into the league of big timers.

       Ramesh Gilli became a banking genius overnight . a quick network of bank branches with ultra modern looks, smart front -office executive , quick , efficient, and hassle free service was a surprisingly refreshing experience for the customers who were the victims of the lethargy of the nationalized banks, ATM’s ,phone banking , easy money transfers, internet banking , and dozens of other financial products and services were backed by high tech and modern management systems .

        

      The going was as good as it could get until a certain client by the name Ketan Parikh , the securities wheeler-dealer , came to roost . Gilli , the genius banker , almost pulled another coup when he tried to merge GTB with UTI bank . The Reserve Bank of India (RBI) smelt the rat in the merger and pulled the rug from under the fleet, only to expose GTB’s misdeeds. Gilli was sacked. the securities and exchange board of India (SEBI), the market regulator, put in place orders that prohibited raising money from the capital market. the stock market drive to the shenanigans of Ketan Parikh. GTB was left with non -performing asset worth Rs 11 billion and a negative net worth.

         What went wrong? GIlli, the deposed chairman, maintain ed that he had delegated the tasks to managers. GTB had indulged in giving 52 per cent of its advances to the stock market, against RBI rules. the erosion of value from this sector sucked the bank. In 2004, the government sanctioned the scheme to amalgamate GTB with the Oriental bank of Commerce. accordingly, customers could now continue to normal banking activities with the new bank. Shareholder would be given pro rata payments if any surplus would remain after paying for all liabilities. the new bank also field cases against those who were involved in wrongful activities by which the erstwhile GTB was defrauded for hundreds of crores of rupees, such as Unitel Software Ltd., Shonk Technologies Ltd., and Peral Distilleries Ltd.

 

    Greed had claimed GTB. it betrayed the trust of enthusiastic customers and shareholders who had great hopes in a free market and economically growing India. GTB not only struck a blow to those who were immediately to it, but also to the very idea of economic liberalization.