NSEL seeks disbursement proof from brokers for Rs 179Cr payout

Scam-hit NSEL has asked its brokers to submit proof of funds disbursed to their clients within the next two days, suspecting that some members acted as a front to facilitate "benami dealings".
NSEL made a special payout of Rs 179 crore in 2013 to member brokers for settling dues of small traders.
This is the third time that the National Spot Exchange Ltd (NSEL), a subsidiary of Financial Technologies India Ltd, has sought this proof from brokers.
The Rs 5,600 crore payment default surfaced in July 2013 at the exchange platform, affecting 13,000 investors.
"In view thereof, the exchange has once again asked its members to furnish information/particulars regarding the special payout made by members to their respective trading clients, duly certified by Chartered Accountant on or before March 13, 2015," the exchange said in a statement.

The exchange said it it would take disciplinary action if member brokers fail to submit the information by March 13 deadline, it added.

The disbursement proof has been sought because the paltry response to the earlier two notices of the exchange puts a question mark on the genuineness of claims, NSEL Joint Managing Director Prakash Chaturvedi said.
"We will be happy if all the claims turn out to be true and their own. But it seems like, based on data we have received so far, it could be that some brokers have acted as a front or proxy where PAN lending, name Lending and KYC lending, benami dealings seems to have happened..." he said.

The exchange in August 2013 had made a special payout of Rs 179 crore to settle the full amount of clients having dues of upto Rs 2 lakh and 50 per cent of clients having dues between Rs 2 lakh and Rs 10 lakh.
The Ministry of Corporate Affairs has also been requested to conduct investigation to verify the genuineness of 13,000 investors before considering the draft merger order, he added.
NSEL also mentioned that in the last four months of operation of the exchange, there was rampant client code modification amounting to over 3 lakh contracts, valuing more than Rs 2,000 crore.

"As a precaution, the exchange has also sought client signature on the information submitted. The exchange will also place on its website the broker-wise and client-wise money distributed as part of its special payout, NSEL said in the statement.