Move To Protect Depositors: RBI

Mumbai, July 25 | Updated: Jul 26 2004, 06:01am hrs
The Reserve Bank of India (RBI) on Sunday stepped in to reassure distraught depositors of the beleagured Global Trust Bank, reiterating that the moratorium was imposed to protect their interests and safety of funds. This comes in the wake of panic-stricken depositors thronging branches to make withdrawals.

Assuring depositors that necessary action was being initiated to ensure return of normalcy, the central bank clarified that customers having demat account and safe deposit lockers with the bank can operate them as usual.

GTB, which came under the regulators scanner following its involvement in the 2001 stock market scam, has been placed under moratorium by the Centre on the recommendations of the RBI from the close of business on Saturday (July 24) and up to and inclusive of October 23, or an alternative date, if alternative arrangements are made.

During the moratorium period, the RBI will consider various options including amalgamation of GTB with any other bank. Depositors have been permitted to withdraw only up to Rs 10,000 from their savings bank account, current account or any deposit account. However, the RBI may, via a general or special order, permit withdrawals exceeding Rs 10,000 but not exceeding Rs one lakh for meeting expenditure relating to medical treatment, higher education, obligatory expenses like marriage or other ceremonies, and any other unavaoidable emergency. ATMs of the bank have since been disabled.

Indiscriminate lending to stock brokers, diamond traders, and exporters proved to be the banks nemesis. It is reeling under accumulated losses of Rs 260 crore and sticky assets of Rs 915 crore.