Processors with the National Spot Exchange (NSEL), who had offered to settle their combined dues of Rs 3,107 crore over a period of five months, will likely offer bank guarantee to sellers initially for four weeks against their outstanding amount, sources said on Thursday.
“After the completion of the four weeks, this guarantee can be rolled over for another four weeks and it would continue until the payment issue is settled. This is another effort by NSEL to smoothen the contract settlement process,” said a source. NSEL said on Sunday that 13 processors were ready for the staggered payment system and they had offered to pay 5% of dues every week. The exchange announced on July 31 the suspension of trading of one-day forward contract, citing “loss of trading interest...due to underlying uncertainties”, amid government crackdown on contracts beyond a settlement cycle of 11 days.
However, eight of its members were willing to pay R 2,181 crore, or 39% of the total outstanding positions, on or before scheduled dates, NSEL said on Sunday. This means such payments are expected to flow in by mid-September as their due dates were based on the previous settlement cycle, before the ban was imposed on trading beyond 11 days.
The Forward Markets Commission (FMC) — the commodity futures market regulator which has been empowered by the government to oversee the settlement process — had directed the exchange to offer bank guarantee after the exchange said on Sunday it had post-dated cheques worth R4,900 crore from various buyers against their dues. Exchange officials said it had stocks worth over Rs6,000 crore against the total liabilities of close to R5,600 crore.
The exchange also came out with details of the stocks it had against the dues on Wednesday. The data showed just five members accounted for 70% of the total outstanding of close to R5,600 crore after the bourse announced suspension of the trading of one-day forward contracts on July 31. However, the value of stocks at the exchange-designated warehouses of these members exceeded the dues of R 3,920 crore.
The move came in the wake of concerns in financial and commodities markets that NSEL might not have adequate stocks to settle outstanding contracts, although the exchange stressed it had stocks to deal with any exigencies.