Apprehensive that settlements on the National Spot Exchange (NSEL) might not take place as scheduled, a clutch of brokers on Tuesday said they did not expect more than Rs 500 crore of the total outstandings of R5,500 crore to be settled.
Claiming they had conducted some warehouse checks, brokers raised questions about the quantity of commodities stored in them and threatened legal action against NSEL. At a press conference held under the aegis of the newly-formed NSEL Investor Forum, Nirmal Jain, chairman, India Infoline, said: “It has been more than eight days since the exchange announced the options for settlement. If buyers have been paying 5% of their dues in a staggered manner, the exchange should have at least R800 crore by now,” Jain added he did not expect more than R500 crore to be recovered.
Motilal Oswal questioned the rationale for NSEL disclosing the details of borrowers and the money they owe the exchange. “The exchange is a counter-party in such events under the by-laws,” said Oswal.
Brokers have questioned the staggered payment schedule as proposed by the spot exchange and also the preference given to retail investors. “The consolidation of settlements and the various options were proposed by the exchange and we did not agree to them,” veteran stockbroker Anand Rathi said.
Anjani Sinha, CEO, NSEL said the exchange had so far collected approximately R450 crore, through RTGS and post-dated cheques, in an escrow account. “We will be submitting this to the Forward Markets Commission tomorrow,” Sinha said.
Sinha added he expected settlements to resume on August 16, after a schedule was given to FMC on Wednesday. “The disbursements can only be made by FMC,” Sinha explained.
A clearer position on warehouse stocks may emerge after Swiss firm SGS completes an audit. NSEL has appointed the firm to audit its 89 godowns. The exchange has also opened an escrow account as directed by the government to ensure repayment to about 8000 small investors.
The media briefing, marked by heated outbursts, also saw brokers and investors raising questions over the genuineness of some of the entities or processors that owe money to the exchange. Sharad Saraf, convenor of NSEL Investors Forum, demanded the government take over NSEL.
Arun Dalmia, chairman of Mumbai-based Watermark Financial Consultants alleged that two entities, which collectively owe the exchange over Rs 1,000 crore, were formed only a few months back in early 2013. “We checked with them and they said they are