New Crisis Brews At Bhubaneswar Stock Exchange

The sanction of 'unsecured' house-building loans to the secretary and executive director (ED) of the Bhubaneswar Stock Exchange has kicked off a fresh row in the bourse, which is already mired in an alleged financial scam of over Rs 1 crore.

The employees of the exchange, in a petition to the management, have resented the selective application of the loan scheme. The employees want to know as to how only two officials availed of the loan, while other staffers were excluded from such benefits.

Moreover, they rued that fact that the loan scheme was never notified officially for the rest of the staff. Besides, the scheme was put in abeyance after the sanction of the loans to ED and the secretary.

Stating that many exchange staff had suffered loss/damage to their houses in the October, 1999, super cyclone, the petition pleaded that the house building advance guideline should be published immediately for the benefit of all employees.

Meanwhile, queries revealed that the secretary and ED were given advances of Rs 10 lakh each in July, 2000, but the loans are yet to be secured by way of mortgage of their properties even after one-and-half years of the disbursal.

The exchange has run into problems over the mortgage issue as legal opinion sought by the management in this regard has suggested that the properties could only be secured by way of registered mortgage and not equitable mortgage.

This means the stock exchange is faced with the dilemma whether to shell out another Rs 2 lakh each on the loan towards the cost of registration.

Such a prospect will put extra burden on the exchange which has advanced loans at a simple interest rate of 8 per cent on a reducing balance basis. As per the loan agreement the principal will be paid back in 180 equal monthly instalments of Rs 5,556 over 15 years, while the interest will be paid thereafter over five years. This means the monthly repayment instalment does not even cover monthly interest component of Rs 6,667.

"We have sought another legal opinion on the issue" said secretary Sanjay Mohapatra. Mohapatra, who has also taken a loan from HDFC for the same property before availing the house building loan from the stock exchange, said, "Though the mortgage documents have not been signed, the title deed of the property has been submitted to the exchange."

K S N Patra, a senior member of the bourse, however, queried, "How could Mohaptra submit the title deed of his property to the bourse when the same property is pledged to the HDFC? Similarly, though the executive director Jay Sadany is on a contractual service for five years, the repayment period allowed to him is 20 years.

He, however, pointed out that there is provision in the loan guideline for recovery of loan even after service separation.

Regarding complaints that the loan guideline was neither approved by the management council nor notified officially, Sadany said, "Though the guideline was put before the council earlier, it was the duty of the secretary to notify the same."

On another front, though the bourse council had agreed to give the loan depending on the availability of the surplus fund, it is noted that the then president Manoj Thacker had extended the loan by borrowing Rs 18 lakh against FDR of the bourse without the council's resolution.

Again, the audited financial statement for 2000-01 seems to have camouflaged the advances to the secretary and ED with the loans being shown as 'house building advance' and does not mention specifically that the beneficiaries were the directors and officers as required under Schedule VI of the Companies Act.