Sorry Story Should Have Been Avoided: India Inc

Mumbai, July 25 | Updated: Jul 26 2004, 06:02am hrs
India Inc is of the unanimous opinion that the episode involving Global Trust Bank (GTB) should have been nipped in the bud by the banking regulator instead of allowing it to fester.

GTB is the first new-age private sector bank to go bust. Till now, mostly it was the cooperative banks which went down because of mismanagement.

Commenting on the development, Nicholas Piramal India Ltd chief financial officer N Santhanam said: Not a healthy development for private banking. Though it is not too late, RBI should have acted much earlier to safeguard the interest of the depositor, before his faith is eroded.

GE Shipping general manager (planning) Rajat Dutta concurs: The auditors of banks and the department of banking operations at RBI needs to be more responsible in their due diligence. Moreover, one needs to be more strict in terms of implementation of the Basel Committee report on non-performing assets, provisioning and capital adequacy ratio.

A top official with an MNC believed that the RBI should have come up with a detailed plan and a strong statement like it did when rumours about ICICI Bank had cropped up some time back. The timing of the decision by RBI is also debatable, as it put the faith in banks under question.

On the likely revival of the bank through a possible merger, Ajanta Pharma chief financial officer Arvind Agrawal said: RBI should be able to salvage the bank and merge it with a strong healthy bank, despite its negative net worth and bad loans.