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The share price of Financial Technologies (India) surged 13.2 per cent on Tuesday after news about its settlement proposal to avoid a long legal battle between its defunct subsidiary, National Spot Exchange (NSEL) and the latter’s 13,000 investors.
The stock hit a day’s high of Rs 199 before softening a bit to close at Rs 191.75. Trading volumes rose sharply.
FTIL had told the BSE exchange it had made a settlement offer to the Union ministry of corporate affairs, subject to several approvals, to resolve the various cases and suits regarding the payments default at NSEL. It has offered to pay Rs 500 crore (of which Rs 180 crore is already paid as a bridge loan) and has proposed brokers pay a similar amount, to start disbursal of payment immediately.
“The amount would enable FTIL to pay 100 per cent to 6,445 clients of Rs 2-10 lakh receivables. Also, 4901 clients with receivables between Rs 10 lakh and Rs 1 crore would get 50 per cent,” it said in the proposal.
Trading clients (781 numbers) with over Rs 1 crore of receivables and high net worth individuals (HNIs) (779 numbers), however, will get 50 per cent and 100 per cent, respectively, in three to four months, once auction of attached properties is conducted.
“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% trading clients’ receive between 50 and 100% of their claims. We sincerely hope 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,” Prashant Desai, Managing Director, FTIL.
“By virtue of this settlement proposal, 11954 trading clients (93.86%) will be paid off by NSEL and brokers jointly in just 3-4 months from now,” said FTIL.
FTIL clarified that the proposal would be workable only if all concerned approve and accept it. Brokers, however, rejected the proposal. “Brokers have very limited role in NSEL issue. Why should brokers pay?” asked Alok Churiwala, Vice-Chairman, BSE Brokers' Forum.
The stock hit a day’s high of Rs 199 before softening a bit to close at Rs 191.75. Trading volumes rose sharply.
FTIL had told the BSE exchange it had made a settlement offer to the Union ministry of corporate affairs, subject to several approvals, to resolve the various cases and suits regarding the payments default at NSEL. It has offered to pay Rs 500 crore (of which Rs 180 crore is already paid as a bridge loan) and has proposed brokers pay a similar amount, to start disbursal of payment immediately.
“The amount would enable FTIL to pay 100 per cent to 6,445 clients of Rs 2-10 lakh receivables. Also, 4901 clients with receivables between Rs 10 lakh and Rs 1 crore would get 50 per cent,” it said in the proposal.
Trading clients (781 numbers) with over Rs 1 crore of receivables and high net worth individuals (HNIs) (779 numbers), however, will get 50 per cent and 100 per cent, respectively, in three to four months, once auction of attached properties is conducted.
“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% trading clients’ receive between 50 and 100% of their claims. We sincerely hope 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,” Prashant Desai, Managing Director, FTIL.
“By virtue of this settlement proposal, 11954 trading clients (93.86%) will be paid off by NSEL and brokers jointly in just 3-4 months from now,” said FTIL.
FTIL clarified that the proposal would be workable only if all concerned approve and accept it. Brokers, however, rejected the proposal. “Brokers have very limited role in NSEL issue. Why should brokers pay?” asked Alok Churiwala, Vice-Chairman, BSE Brokers' Forum.
Since the payment default of Rs 5600-crore broke out at NSEL in July 2013, all parties in the chain: FTIL, NSEL, brokers, defaulters, investors and clients have filed several suits against one another for their negligence.
NSEL has already secured decrees for disposal of attached assets of defaulters worth Rs 513 crore. Properties worth Rs 4823 crore have already been attached by various government agencies.
