NSEL defaults again, by a huge margin

In its fourth default, the crisis-ridden National Spot Exchange Ltd (NSEL) on Tuesday announced the disbursal of Rs 13.45 crore to investors, against the total commitment of Rs 174.72 crore.

Acting according to the process directed by the Forward Markets Commission (FMC), the exchange realised Rs 7.77 crore by auctioning underlying commodities in members’ warehouses. The remaining amount was received from members. The exchange announced a total pay-in of Rs 0.695 crore from its members until September 6, the last day of the fourth pay-in schedule, as announced by NSEL last month.

Alok Churiwala, vice-chairman, BSE Brokers’ Forum, said, “Investors’ nerves remained frayed, with NSEL defaulting for the fourth time on the revised settlement plan. There is little patience left for excuses, for not getting their dues as committed and seething anger on the repeated defaults. Expectations of government stepping in strongly and taking concrete steps run high.”

In the first three pay-out schedules, the exchange had received Rs 120.10 crore from its 24 registered members and recorded a total deficit of Rs 409.56 crore.

NSEL is pursuing the recovery of dues from members with pay-in obligations. It has initiated civil and criminal proceedings against defaulting members, besides taking action under the rules of the exchange. So far, 19 members had been declared defaulters and legal proceedings have been initiated against them, said an NSEL statement. While 13 defaulters have met exchange officials during the last two weeks, six are yet to do so. Legal notices against 14 defaulters have been issued under the Negotiable Instruments Act for bouncing of cheques for settlement.

So far, five defaulters, with a liability of Rs 1,328.48 crore, have committed to providing their properties as collateral for recovering the dues. The value of the collateral stands at Rs 1,458 crore, according to the defaulters. NSEL was yet to carry out an independent assessment of this, the exchange said. With the auctioning process underway, the realisation is set to rise in the coming days.

Chartered accountants Sharp and Tannan Associates (STA) confirmed the total liability of defaulting members stood at Rs 5,574.25 crore, as on August 12. STA also conducted a physical audit of gold, silver, platinum and base metals in respect of e-series contracts and found the stocks in order.