In a dramatic turn of events, Ramesh Gelli resigned from the Global Trust Bank board. Gelli, the promoter of the bank, had returned to the board as non-executive director on February 15, after a gap of three years.

Gelli said he resigned from the bank's board because he wanted to concentrate on the turnaround fund, which he proposes to float to rescue troubled projects awaiting completion. His son, Girish, will continue to be on the board.

Industry sources said his resignation could have been prompted by the Reserve Bank of India's reservations about his return. However, Gelli denied any knowledge of the RBI's reservation.

"I will soon leave for the United States and the United Kingdom to look for investors for the turnaround fund, which will be my focus area now. Though I am leaving the bank board, I will support its rights issue," he said.

Gelli is also set to contest the Lok Sabha elections from Secunderabad on a TDP ticket. He declined to comment on this. "Nothing has been finalised yet," he said.

Speaking to Business Standard, Gelli said the turnaround fund, likely to be christened the Indian Phoenix Fund or Second Life Fund, has already got commitments worth Rs 20 crore (Rs 200 million).

"Vulture funds abroad are showing interest in putting money into the fund, which will step in as a last-mile investor for projects that are awaiting completion or are completed but need working capital support," he said.

Gelli plans to create a Rs 100 crore (Rs 1 billion) pool to start with over the next few months. The fund will invest Rs 3-10 crore (Rs 30-100 million) in troubled projects and provide both management and financial inputs to sick companies. "We will try and help sick companies in terms of identifying new technology, products and markets," he said.

The fund will seek contributions from domestic financial institutions, mutual funds and high net worth individuals. It will focus primarily on organisations in sectors like infotech, pharmaceuticals and biotechnology.