OBC gives GTB branches loan leeway

GTB staff need not wait for HQ approval

In a strategic shift, all Global Trust Bank (GTB) branches will start sanctioning loans to prop up the asset book.

"The branches never did any business as all loan and investment decisions were taken at the headquarters level. We want to empower the branches. Let them take loan decisions. This will cut down the time (of decision making)," said B D Narang, chairman and managing director, Oriental Bank of Commerce (OBC) which acquired the failed private sector bank.

"The staff of GTB are very well-qualified. I want to empower them so that they can take decisions on their own. I have given them a target of tripling their business by March 2005," he said. Narang has been touring many of the GTB offices to gauge the comfort level of GTB employees in handling business.

GTB, as on March 2003, had a total business of over Rs 10,000 crore and 9 lakh customers.

Prior to the merger with OBC, all power at GTB was kept concentrated at the corporate office. Branch managers had to forward proposals to the corporate office and await for sanction of proposals.

OBC has committed to protect the salaries of all the GTB employees for three years. "The difference in salaries will only be with regard to the top 100 people and we will protect it for three years. There will be no voluntary retirement scheme and no firing," Narang said.

OBC has put out a tender for an international advisor to look into the issues regarding the integration process. To start with, only the treasury departments of the two banks will be merged, while rest of the GTB will remain as a strategic business unit until a plan is charted out for the integration process.

Narang is hopeful of the recovery of bad loans that GTB has accumulated. "Out of the total NPAs of Rs 1,400 crore, about 40 per cent should be recoverable over a two-year period. The accounts are difficult to recover because many of them are big accounts," said Narang.

He admitted that OBC will not remain a zero NPA bank after the merger. "I am not obsessed with zero NPA. Even after the merger, our provisioning coverage will be about 80 per cent which is way above the industry average," Narang pointed out.

The greatest gain in the merger, he said, is the 9 lakh 'educated and professional' customers.