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Court dismisses Gupta firms' bid to halt Bank of Baroda's SA exit

12 March 2018

A group of nearly 20 South African companies linked to the Gupta family have lost a court bid which sought to have India'sBank of Baroda, the last lender doing business with the firms, maintain operations in the country, court documents showed on Monday.

In January, Nedbank informed the Bank of Baroda that it would terminate its relationship with the bank in three months.

The bank announced in February that it would be shutting its doors and exiting the country by the end of March, but the Gupta-owned companies, which include Oakbay Investments‚ Oakbay Resources & Energy and Optimum Coal Mines, challenged this, saying that an interdict ruled in December prevented the bank from leaving the country.

BoB opposed the application, pointing out that it did not operate a clearing bank in South Africa and in the past enjoyed a correspondent banking relationship with Nedbank which permitted funds of Baroda's customers to be transferred from Nedbank's infrastructure to third parties.

Baroda said a month ago that it had pulled the plug on its South African business, citing a strategic decision to slim down in global markets. This means that from 1 April 2018, Baroda would not have banking facilities with Nedbank - on which it relies to provide banking services to its own clients.

Judge Mavundla said without the infrastructure of Nedbank, BoB could not be expected to service the accounts of the Gupta companies.

Judge Tati Makgoka ordered Baroda in October past year to continue providing banking services to the Gupta-linked companies to protect their 7‚000 employees.

"Baroda has every right to terminate any business contract, including that of the applicants".

The scandal-hit Gupta family has been dealt another blow after a court bid to keep an Indian bank in South Africa failed. It can not therefore be said that the exit is ... calculated to frustrate the (court) order.

Judge Ntendeya Mavundla said the bank's right to trade or not trade superseded the rights the companies had.

Court dismisses Gupta firms' bid to halt Bank of Baroda's SA exit