Depositors fear for their savings

Oriental Bank of Commerce will now take over the 10-year-old, private bank that has nearly a million customers.

India's Finance Minister Palaniappan Chidambaram has said he believed Global Trust deposits are "reasonably safe".

Oriental says it can shore up the bank within a year, adding that customers will be "totally looked after".

According to Oriental's chairman and managing director, B.D. Narang, the problems at Global Trust stemmed from its bad debts.

By contrast, Oriental has a "very strong balance sheet" and the new group "will be very liquid," Mr Narang said.

Shares in Global Trust plummeted by 20% on Monday, the maximum allowed during a trading session. Oriental shares, meanwhile, gained 2%.

One-off withdrawals

What is 10,000 rupees for three months? It will be very difficult Parul Karachiwala, Indian businesswoman

Global Trust is one of a number of private banks established after India opened up its financial sector a decade ago.

Mr Chidambaram said that the bank "had been sliding for several months now".

He added that: "Maybe not enough vigilance was maintained in the past... I have urged all concerned to exercise greater vigilance".

That may be of little comfort to many of the bank's customers, many of whom were queuing on Monday to get their money out.

The bank has been ordered not to issue any new loans without central bank permission and a three-month moratorium on withdrawals has been imposed, barring a one-off payment of 10,000 rupees ($216; £117).

"What is 10,000 rupees for three months?" asked Parul Karachiwala, a 49-year-old businesswoman, who has an account at the bank. "It will be very difficult."

Shiv Sena, a political party based in the west of India, has called for an immediate end to the moratorium and for the central bank to raise the upper limit of the one-off withdrawals.

Push through

The central bank, which has the right to force a merger under the Banking Regulation Act, said that it was taking the step to ensure that the lender remained in Indian hands.

Global Trust executives had earlier this month proposed an injection of equity from an overseas investor but the Reserve Bank of India (RBI) rejected the move because it did not want foreign investment in the lender, RBI Executive Director Usha Thorat said.

Ms Thorat went on to explain that as the option of using foreign equity was not was acceptable to the RBI, "the next stage was clearly a compulsory amalgamation".