Abstract

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. 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.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze the reasons that led to the fall of Global Trust Bank.

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