Nearly four months after trading was suspended on the National Spot Exchange (NSEL), a settlement between investors and Jignesh Shah-promoted Financial Technologies (FTIL), the parent company of NSEL, seems to be in sight.
The settlement is unlikely to affect the ongoing criminal proceedings in the matter wherein agencies like the Economic Offences Wing (EOW) and Enforcement Directorate (ED) are looking into the charges.
According to senior members of NSEL Investor Forum, the settlement would involve FTIL giving an assurance to pay a portion of the total outstanding amount of R5,600 crore and, thereafter, the forum could work together with FTIL to recover the balance amount from the borrowers.
“We met Jignesh Shah and FTIL people 4-5 times in the past and discussed the amount of settlement and also what we (forum) need to give up in lieu of the agreed settlement amount,” said CP Khandelwal of Systematix Shares & Stocks. “I believe the picture would be clear by the weekend or early next week,” said Khandelwal during a meeting of the forum members.
While he refused to disclose the amount of settlement, it is believed that it could be in the range of R1,100 crore to R1,200 crore, and would be paid in monthly instalments over a period of up to one year. An FTIL spokesperson, when contacted, declined to comment as the negotiations are still on.
Meanwhile, the forum may look at revising the writ petition filed in the Bombay High Court in case the settlement is reached. The petition has named FTIL and its directors as a party to the case. Based on the outcome of the negotiations, the investor body will also decide if it wants to file winding up petitions against FTIL.
This assumes significance in the light of FTIL’s recent stake sale in Singapore Mercantile Exchange (SMX) for $150 million to Intercontinental Exchange Group. The forum is planning to file a seperate writ in the Bombay High Court, seeking to bar FTIL from using the sale proceeds to repay its external commercial borrowings. The forum has already shot off letters to the Reserve Bank of India (RBI), ED and the EOW in this regard.