The Rise and Fall of Global Trust Bank
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(Case Code: FINC038) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Case Details: |
Price: |
| Case Code |
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FINC038 |
For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Shipping & Handling Charges extra
ThemesCorporate Governance |
| Case Length |
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16 Pages |
| Period |
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2000 - 2004 |
| Pub. Date |
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2005 |
| Teaching Note |
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Not Available |
| Organization |
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Global Trust Bank (GTB) |
| Industry |
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Banking |
| Countries |
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India |
Abstract:
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The case describes the growth and collapse of Global Trust Bank, a leading private sector bank in India. Since 2001, GTB's name was associated with scams and controversies, thereby casting shadows over the credibility of the bank and its management.
Due to the over exposure to capital markets and huge NPAs, the bank was in a financial mess. When GTB tried to cover up its monumental NPAs
through under provisioning, RBI - the Central bank and the regulatory authority
for banks in India, appointed an independent team to review the finances of the
bank. The review revealed various financial discrepancies kept covered by the
bank.
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RBI imposed a three month moratorium on GTB on the ground of "wrong financial disclosures" and within two days the bank was merged with Oriental Bank of Commerce (OBC), a public sector bank. With the merger becoming effective, GTB's identity came to an end and it became a part of OBC.
Issues:
» The case aims to teach students how financial mismanagement can lead to significant losses for a bank. The case is designed to enable students to:
» Analyze the reasons that led to the fall of Global Trust Bank
» Discuss the importance of proper supervision and control systems in a bank to mitigate risks
» Understand how overexposure to capital markets can lead to huge NPAs for a bank
» Appreciate the need for financial institutions to uphold the ideals of transparency and absolute scrupulousness where public money was involved
» Examine the role of RBI as a regulating authority and debating on the justifiability of its actions in the GTB fiasco
Contents:
Keywords:
Case, Global Trust Bank, Wrong Financial Disclosures, Non-Performing Assets, Financial Irregularities, Capital Adequacy Ratio, Private Bank Failures in India, Control Systems, Transparency and Regulatory Authority
The Rise and Fall of Global Trust Bank
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