The Mumbai-based chartered accountancy firm M P Chitale & Co has been appointed to conduct a due diligence exercise on Global Trust Bank, before it is merged with Oriental Bank of Commerce.

The firm's mandate is to do due diligence as on the date of the moratorium imposed on the bank and as on the date of merger with OBC.

When contacted, Rajendra Chitale , the managing partner at M P Chitale & Co, declined to comment on the issue.

The due diligence report will form the basis for the merger as it will come out clearly with GTB's net losses, non-performing assets s well as asset size.

The assets will include the technology platform, branches and ATM network and corporate and retail clientele.

Prior to this, PricewaterhouseCoopers was GTB's auditor. According to Reserve Bank of India sources, M P Chitale & Co will not be involved in any auditing exercise and will limit itself to the due diligence.

Banking sources said the as per OBC estimates, GTB had reported a loss of around Rs 750 crore (Rs 7.50 billion) and that it had Rs 1,500 crore (Rs 15 billion) in NPAs.

Of the Rs 1,500 crore, 30 per cent can be recovered. The banks and the RBI have already started a consultation process on recovering NPAs.

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Banking sources said that while those who were involved in stock market scams and owed GTB money could be served with legal notices, negotiations would be held with companies that couldn't repay GTB owing to genuine losses.

Besides, OCB will get a tax rebate for another 30 per cent of the NPAs. So even if the rest of GTB's dues remain unrecovered, OCB will not take a big hit because it is gaining assets and geographical reach.