Criminal case against GTB promoters

Charges this month: Chidambaram.

Finance Minister P Chidambaram today said criminal cases would be filed this month against those responsible for the collapse of Global Trust Bank. However, he ruled out a joint parliamentary committee probe into the private bank's collapse in July.

"If any one has done any criminal act (leading to GTB's collapse), he will be punished. Investigations are over," Chidambaram said, replying to a calling attention notice in the Lok Sabha. The finance minister said GTB promoter Ramesh Gelli "was being indulged under a particular dispensation".

Stating that action was taken in the GTB case only after this government came to power, Chidambaram said the wound had been growing over the last two to three years.

When contacted in Hyderabad, Gelli said he did not want to comment on the matter.

Rejecting the demand for the constitution of a joint parliamentary committee to inquire into the bank collapse, Chidambaram said, "If I have been idle or the government was idle, then, there was a need for a JPC."

The issue was raised by Ajoy Chakraborty, Gurudas Dasgupta, CK Chandrappan and Basudeb Acharya of the Left parties. In his statement, Dasgupta said the bank was allowed to function despite an earlier JPC finding enough evidence of malpractice and misappropriation.

While alleging that the Reserve Bank of India (RBI) was covering up the fraud, he wondered what the RBI directors on the GTB board were doing.

In his statement, Chidambaram said the statutory auditors appointed by GTB for the years ending March 31, 2002, and March 31, 2003, failed to identify the non-performing assets of the bank.

RBI inspections revealed a different picture. "The RBI has written to the Institute of Chartered Accountants to take action against the statutory auditors under the relevant statutes," he said.

The minister said it was on his advice that the RBI rejected the proposal submitted by GTB for infusion of fresh capital by Newbridge Capital Ltd, a limited partnership based in the Cayman Islands.

"This proposal was not acceptable to the RBI on account of certain requests by the investor for regulatory concessions and prudential forbearance as also foreign jurisdiction for dispute resolution," said Chidambaram.

GTB had put in the proposal after it failed to locate a domestic investor who could infuse the requisite capital. Chidambaram said there was no sudden 'collapse' of the bank. The deterioration in its financial health came to RBI's notice when the bank's performance was reviewed by it in July-October 2002.

Even earlier there were some disturbing developments. "The RBI initiated corrective action and provided an opportunity to the GTB management to infuse capital. When these efforts failed on the recommendation of RBI, the government placed GTB under an order of moratorium to prevent its collapse," said Chidambaram.

Left hook

Gurudas Dasgupta says GTB was allowed to function despite a JPC finding evidence of malpractice

Alleged the Reserve Bank of India was covering up the fraud