Do We really bank our money on banks - Part II

In continuation with the previous post, this post digs into the details of why GTB crashed.

GTB's founder Mr.Gilli has close connection with Ketan Parakh & former Andhra CM Naidu. GTB was in the brick of controversy in late 2000 itself and RBI also knew about that. Since Vajpayee was in the power and the NDA required Naidu's support, RBI's hands were tied up to take bigger action against GTB.

In the meanwhile, GTB was approached by many private funding agencies to restructure their loans and it finally zeroed down to NewBridge Capital. GTB even put up proposal outlining the funding expectations & requirements of NewBridge capital. RBI was not convinced about the expectations of NewBridge Capital for taking over the bank.

Act 2. Post elections, NDA lost the govt, so is Naidu. RBI has circulated the take over of GTB to many nationalised banks. In the meanwhile, the deadly ATMs closure & branch closure happened. To put a full stop for GTB's hanging fortunes, RBI asked the CEO/MD of Oriental Bank of Commerce to fly to mumbai by July 24th to brief him about the deal.

With controverisies involved and not-known-behind-the-scenes-board-wars, RBI finally announced the takeover of GTB by OCB on monday July 26th.

This shows how vulnerable our private banking system, even with RBI when they have a political say.

I remember our own famous villain, Veerappa (yester year Villain of MGR & Sivaji period) uttering a famous dialogue in one of his movies.....

" intha naadum, intha maKKalum nasamaI pogaTTum"

More interesting read on this issue in Businessworld
"How the Trust was lost"
"The shadow of Lost Trust"

and exactly 6 months after, i met writer Charu nivedita again...for the uninitiated, Charu nivedita is one of the finest neo-surrealist writer in tamil. To know more about charu's work, check his pages over here