FTIL offers Rs 1000 cr settlement plan; brokers reject proposal

NSEL Investors Forum rejected the settlement proposal and said FTIL was 'misleading the govt and the investors' and the company should pay the entire dues

Financial Technologies today said it has submitted to the government a Rs 1,000-crore settlement plan, including Rs 500-crore to be contributed by brokers, to clear the claims of small and mid-sized investors on scam-hit National Spot Exchange Ltd (NSEL).

The plan, "without prejudice" to FTIL's legal rights, is subject to board and shareholder approval and acceptance by brokers and investors, it said.

NSEL Investors Forum, however, rejected the settlement proposal and said FTIL was "misleading the government and the investors" and the company should pay the entire dues.

The Rs 5,600 crore scam surfaced at FTIL's subsidiary NSEL in August 2013 affecting 13,000 investors. The spot exchange has recovered only Rs 371.8 crore from defaulters as on March 30 this year.

In a regulatory filing, the company said that settlement plan envisages FTIL contributing Rs 500 crore and a similar amount by brokers to pay off investors who have lost Rs 2-10 lakh on the NSEL and return half the amount to those who have invested between Rs 10 lakh and Rs 1 crore in 3-4 weeks after completion of all formalities.

"First round of payments made to be equally by NSEL and brokers," FTIL said, adding the company would contribute Rs 320 crore as it has already given a bridge loan of Rs 180 crore to NSEL earlier for clearing dues to small investors.

With the contribution of FTIL and brokers, about Rs 820 crore would be available for immediate payment to small and mid-level investors, it added.

The pending claims of small investors is about Rs 164 crore, while that of mid-size investors is Rs 1,345 crore.

As per the plan, the FTIL said 779 high networth individuals with claims of over Rs 1 crore will also be paid 50 per cent of their dues. Public sector undertakings will be compensated with 100 per cent of their claims.

The pending claims of these investors is to the tune of Rs 3,365 crore and this would be settled with the recovery of money from defaulters, it added.

Although FTIL had submitted the settlement plan to the Finance Ministry on March 13, it made the same public today.

"We believe that a resolution/settlement path is better alternative for all including brokers and trading clients of NSEL. We have proposed a solution that ensures 94 per cent trading clients' receive between 50 and 100 per cent of their claims," FTIL CEO and Managing Director Prashant Desai said.

He said FTIL sincerely hopes that all affected parties will opt for this path than the long legal litigation route, which is anyways being pursued by one and all.

"We also hope that the Government will also provide its guidance and assistance to help recover dues from Defaulters to whom all money trails have been established. We have utmost faith in Indian democracy and the law of the land and we will continue to follow the long legal path if the resolution path does not find acceptance with brokers and trading clients," he added.

NSEL Investors Forum Secretary Arun Dalmia said, "We are not accepting the settlement plan proposed by FTIL. The plan has been submitted to government without discussing with brokers and investors."

"Why will brokers contribute Rs 500 crore? FTIL is misleading the government and investors. We want the company to pay all dues," he added.