NSEL defaults again, starts warehouse audits

Crisis-ridde National Spot Exchange Ltd has again failed to make scheduled payments to investors on Tuesday even as an independent audit indicated significant shortage of stocks in nine warehouses of seven of the bourse’s defaulters, it said in a statement.

The commodities exchange paid only Rs.7.77 crore against its weekly settlement dues of Rs.174.72 crore.

The exchange, which suspended all trading in one-day forward contracts on 31 July without assigning any reason, defaulted on its first three payouts in the preceding three weeks. The exchange-appointed SGS Group, a Swiss commodities quality and quantity assessment firm, indicated significant stock shortage in nine warehouses of seven defaulters, the statement said. Inspection was not allowed by the warehouse owners in 29 warehouses related to other 11 defaulters. Report for two more warehouses is awaited, the statement added.

The exchange has initiated legal proceedings against the 19 defaulting members. It has issued legal notices to 14 defaulters because their cheques bounced.

So far, five defaulters with outstanding liability of Rs.1,328.48 crore have committed to provide their properties worth Rs.1,458 crore as collateral, the exchange said.

The bourse has appointed P.R. Ramesh as an officer on special duty on 20 August to exercise all powers of a chief executive officer.

On 27 August, the spot exchange said it had taken a loan of Rs.177.23 crore from its promoter Financial Technologies (India) Ltd to pay investors to whom it owed up to Rs.10 lakh each.

The exchange had then said that the 608 investors to whom it owed up to Rs.2 lakh each on 31 July would be paid fully and pay only 50% of the dues upfront to 6,380 investors who are to receive between Rs.2 lakh and Rs.10 lakh each. The rest would be paid proportionately as per a settlement plan, it said.

Settlement with small investors is outside the purview of the 14 August schedule and has not been approved by Forward Markets Commission, which regulates forwards and futures markets in India

                                                                                                                            By
                                                                                                                 Muntazir Alam
                                                                                                                     PGDM-1