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Home  » Business » OBC takes criminal action against 30 borrowers

OBC takes criminal action against 30 borrowers

By BS Banking Bureau in Mumbai
April 13, 2005 11:06 IST
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The Oriental Bank of Commerce has initiated criminal action against 30 borrowers to recover Rs 980 crore (Rs 9.8 billion). The list of borrowers includes Shirpur Gold of Maharashtra and the south-based Balaji group.

These loans were given by the erstwhile Global Trust Bank (which was merged into OBC in August 2004) for business purposes but were diverted into the capital markets.

Other borrowers such as the Videocon group (for Rs 30 crore) and the Zee group have made settlements with OBC and returned their dues, said senior OBC officials at the sidelines of a press conference held by the Delhi-based bank to announce its second public issue scheduled to hit the market on April 25.

On taking over the private sector, Global Trust Bank, OBC inherited bad loans to the tune of Rs 1,293 crore (Rs 12.93 billion).

"Out of this Rs 200 crore (Rs 2 billion) has been recovered in cash and Rs 57 crore has been upgraded from the bad loans category," said B D Narang, chairman & managing director, OBC said.

Accounts worth Rs 445 crore (Rs 4.45 billion) were approved for compromise proposals, Rs 410 crore (Rs 4.10 billion) was restructured and re-scheduled, in cases worth Rs 57 crore (Rs 570 million) civil action was initiated and criminal action was initiated in 30 cases worth Rs 980 crore.

OBC inherited a net deficit of Rs 1,225 crore (which represents the excess of liabilities over assets) when it took over GTB.

"Our endeavour is to focus on recovery. By June 2005 Global Trust Bank will a history of the past," said Narang. In the next phase of integration, OBC will embark on the process of branch rationalisation.

"There are several cities in which OBC branches and GTB are next to each other. I will not, however, spell out how many branches need to be closed since these are sensitive numbers involving people," said Narang.

OBC expects to post a net NPA figure less than 1 per cent for FY 2005. The net NPA for the bank had been 1.7 per cent as on December 2004. OBC had had nil net NPA prior to taking over GTB.

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BS Banking Bureau in Mumbai
Source: source
 

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