State Bank Strike Precipitates Bse Payments Crisis

A section of Mumbai-based brokerages operating from the Bombay Stock Exchange and the National Stock Exchange are believed to be facing serious financial problems owing to the ongoing State Bank of India officers strike. About 20 brokers are reportedly facing a payments crisis, with the shortfall estimated at about Rs 45 crore.

The brokers are facing financial problems on two counts. The first problem is linked to SBIs securities branch acting as the custodian and banker of many brokers and as the custodian to some FIIs.

The problem has been aggravated since other banks have stopped clearing SBI cheques. So the brokers accounts are virtually frozen. The same goes for brokers who have SBI as their custodian. These brokers have failed to deliver the shares in the market, explained a source. The second issue involves SBIs securities dealings through BSE and NSE brokerages. Since the strike began on June 11, during the settlement period on the BSE, brokers had already bought/sold securities on behalf of SBI.

 

The brokers had assumed that the strike would be called off soon. Therefore, they did not square off their positions or intimate the exchanges about their payment problems. While the deals have been already effected, neither the shares nor the funds have reached the exchanges clearing house, said senior BSE sources.

BSE president M G Damani said the exchange has already held a meeting with the RBI, SBI and Sebi to sort out the issue. ``We have given some suggestions and a solution is expected shortly, he said.

Damani feels that the exchange should be in a position to declare a timely pay-out on June 23 and the settlement cycle would not have to be increased. We are making alternate arrangements so that the settlement does not get affected, he added.

BSE executive director R C Mathur declined to term the problem a crisis. ``There is a will to pay and means to pay as far as brokers are concerned, he said. Other banks will step in to make the payment on SBIs behalf and the delivery-related issues will be handled separately, he asserted.

NSE officials also expressed confidence that the exchanges settlement cycle would not be delayed, although they conceded that some brokers have been affected by the SBI strike.

SBI officers threaten indefinite strike from June 26