Mumbai, July 26: Global Trust Bank (GTB) shares turned into scraps of paper, though a plan to merge it with Oriental Bank of Commerce allowed customers to breathe easy.

Many had amassed the shares on hopes of a probable deal with a foreign investor, who would infuse cash and shore up its capital adequacy ratio to safer levels.

Only last month, there were reports that Newbridge Capital made a proposal to the Reserve Bank for picking up a stake. However, it was spiked on the grounds that its terms were not in line with Indian bank norms.

Today, two days after its troubles erupted, the GTB share crashed by the maximum permissible 20 per cent to Rs 10.54, the plunge halted by circuit-filters on bourses.

Sebi, always suspicious that many in the market would seek to turn the crisis into an opportunity for foul play, warned the behaviour of the scrip would be closely watched and appropriate surveillance action initiated.

BSE has put the stock in trade-to-trade segment from Tuesday as part of a surveillance measure under which it will be out of circuit-filter norms.

“Any price manipulation in the GTB share or any manipulative operations in demat accounts will invite severe regulatory action,” the market regulator cautioned.

Operators did not see much significance in the tough talk, wondering why investors would buy a near-worthless share of a bank whose equity capital and reserves will be used to plug the hole made by dud loans.

A recent precedent is Nedungadi Bank, a private-sector bank that had to be merged with Punjab National Bank in a rescue mounted after its networth evaporated. “Equity is, after all, risk capital,” an analyst said.

The fallout of GTB’s role as a clearing bank appeared to be limited. Sebi said only a few brokers on Dalal Street had remitted pay-in amounts through the crisis-ridden bank. The sum involved, too, was not significant.

BSE broker-members were given time to replace GTB bank guarantees and fixed deposits with those of other banks.

Depositories were insulated from the collapse through an RBI clarification that the moratorium clamped over the weekend would not apply to demat accounts. Global Trust is a participant in NSDL and CSDL.

GTB wrote to exchanges today that it is required to submit suggestions and objections to the draft scheme of amalgamation with OBC by August 7.