Cse To Incur Marginal Loss In 2000-01

The Calcutta Stock Exchange (CSE) is set to settle the financial impact of the payment crisis that brought the local bourse to its knees by incurring a single digit loss in its balance sheet for 2000-01.

Sources said the loss of nearly Rs 8 crore would be incurred after adjusting the amount withdrawn from its general reserves with the previous year's surplus.

The bourse had to withdraw money from its general reserves, after exhausting its settlement guarantee fund (SGF) to meet pay-out obligations.

The crisis emerged when 10 defaulters, owned by three big ticket brokers, failed to honour their pay-in commitments in March. These entities owe over Rs 92 crore to the exchange.

Sources added that the loss figure could be altered one more time tomorrow when the board sits formally to approve the accounts.

However, they confirmed that the loss figure, if altered, would not be a double digit figure. Once the balance-sheet is approved by the CSE board, the accounts will be placed before the CSE members at its annual general meeting, which has been deferred for a maximum period of three months from September.

CSE managed to avert a constitutional crisis when it received a three month extension from the Registrar of Companies (RoC) to conduct its AGM.

Had the exchange been denied RoC permission, the AGM would have to be convened and fresh brokers would have to be elected in consonance with the laws of the exchange.

However, with the finance minister having declared that stock exchanges would be demutualised and trading rights, ownership and management separated, election for broker directors would have been a pointless exercise.

CSE sources said the first round of battle was almost won with the exchange incurring only a marginal loss.

The greater challenge, they added, was to restore confidence among members. The authorities have already begun talks with the local big ticket brokers, who are not trading with C-Star, CSE's online trading system. The response, the authorities claim, has been positive.

Meanwhile, the Joint Parliamentary Committee (JPC) probing the stock market scam has summoned the past president and directors of the exchange to appear before it on October 10.

The entire CSE board resigned following the payment crisis. Sebi has put in place a management sub-committee headed by Dipankar Basu, to keep the show going at CSE.