The return of Gelli's comet

BACKSTAGE

Ramesh Gelli clearly has a talent for the comeback. In 2001, he resigned as chairman and managing director of the troubled Global Trust Bank (GTB), of which he is founder-promoter, following accusations of insider trading.

Three years later, on February 16, he came back as non-executive director. That is just one of his new avatars. Gelli has also announced the setting up of a Rs 100-crore "turnaround fund" to nurse sick companies plus a foray into politics in his native Andhra Pradesh.

And since the joint parliamentary committee (JPC) report did not indict him, Gelli is being considered cleared of the charges that linked him with discredited stockbroker Ketan Parekh.

Anybody who has followed Gelli's career may not find these latest developments unexpected. With his strong political links in Andhra Pradesh and as the only banker to win a Padma Shri (in 1990) when he was chairman of Vysya Bank (now ING Vysya), Gelli has been something of a meteor on the banking firmament.

That honour was reportedly a recognition of his services in making Vysya a banking powerhouse, a fact even his competitors acknowledge.

In 1994, taking advantage of P V Narasimha Rao's liberalisation policies, Gelli stitched together a professional team of bankers and set up the Global Trust Bank (GTB). One of the first private sector banks under the new rules, GTB initially carved out a niche for itself.

When GTB came out with an initial public offering (IPO), it was oversubscribed 60 times and on its first day it had a deposit base of Rs 100 crore.

Within the next 10 years, GTB acquired a deposit base of Rs 4,000 crore, spread across 63 branches. But just when everyone thought Gelli could do nothing better he came out with another apparent winner, which was to change his fortunes "" literally.

This was an announcement in January 2001 of a merger of GTB with UTI Bank to create one of the largest private sector banks in the country. The merger had everything going for it, but a month after the swap ratio was announced (one GTB share for 2.25 UTI Bank shares), things went badly wrong.

The stock market plunged following the Union Budget, and the Securities and Exchange Board of India (Sebi) stepped in, accusing Gelli of leaking insider information to Ketan Parekh on GTB's merger with UTI Bank.

Sebi's contention was that Parekh rigged the GTB scrip price just before the merger was announced so that the swap ratios would favour GTB's promoters. Sebi also levelled allegations that the promoters of GTB had indulged in trading of shares ahead of the merger announcement.

Thereafter, GTB shares plummeted from Rs 100 (a day before the merger was announced) to Rs 21 on April 4. On the same day the GTB board decided to announce that the merger was no longer on. Gelli paid with his post of chairman and managing director.

The honeymoon was clearly over but more was to come. Mounting pressure from the regulators saw Gelli stepping down from the GTB board in June 2001. This was despite a section of GTB shareholders requesting him to stay on at the bank's eighth annual general meeting.

An upset Gelli blamed the media for the trouble that he and the bank found themselves in. In one of his interview, he said, "...the adverse press coverage affected the reputation of the bank."

Then on Christmas day last year, Girish Gelli, his eldest son, was appointed a non-executive director on GTB's board. Two months later, Gelli, who together with associates still holds roughly 20 per cent of GTB's equity, was back on the board too.

With a gold medal from Manila's Asian Institute of Management, a degree from the London Business School and an engineering degree from Osmania University, Gelli certainly has the academic record to succeed in a corporate career. But it is his penchant for playing for ever-higher stakes that has probably kept him on the comeback trail.