The market reaction
By Pradeep Rane | 27 Jul 2004
The shares have now become defunct and will be extinguished after the merger of the Hyderabad-based bank with the Oriented Bank of Commerce (OCB). The shareholders of GTB will not benefit from the merger.
This morning, GTB shares, which opened at Rs10.54, crashed by over 70 per cent to touch Rs1.50. Yesterday, they had crashed by over 20 per cent. This morning the Bombay Stock Exchange and the National Stock Exchange (NSE) put GTB shares under trade-to-trade category.
The decision to move GTB shares under the trade-to-trade category, was taken after the Securities and Exchange Board of India (SEBI) had a late evening meeting on Monday, July 26, with the officials of the two exchanges in order to prevent any manipulation in the shares. The two exchanges have also decided that no circuit filter would apply for the shares.
SEBI at this meeting with stock exchanges and the depositories, also reviewed the likely implications of the moratorium imposed on GTB for the securities market and has taken appropriate precautionary steps. GTB is a clearing bank for BSE.
According to a SEBI press release, BSE has said that pay-in amounts made through GTB as clearing bank of BSE has been only by a few members and the amount involved is not significant. Further, these members have made necessary alternative arrangements.
NSE and BSE also informed SEBI that the amount of bank guarantees and fixed deposits of GTB furnished by members towards their base minimum capital / additional capital is moderate and the relevant exposure not covered by other collaterals is also not enough to create any adverse impact.As such there will be no need to deactivate the trading terminals of any member.
GTB is also a depository participant of both NSDL and CDSL. The RBI has clarified that the operation of demat accounts will not be affected in any way by the order of moratorium.
