With a Rs 177-crore bridge loan from its parent, Financial Technologies, crisis-ridden National Spot Exchange Ltd (NSEL) managed to mop up Rs 190 crore just ahead of the deadline for the second payment schedule.

The NSEL will use the Rs 177.23-crore Financial Technologies loan and the Rs 12.60 crore accrued in the escrow account to settle dues of small investors immediately. The exchange has agreed to pay Rs 5,600 crore to its investors in 30 weeks.

Mayaram Panel

To unravel the goings on at the spot exchange, the Government set up a task force under Economic Affairs Secretary Arvind Mayaram. Commenting for the first time on the NSEL crisis, Finance Minister P. Chidambaram said that action against the exchange will be taken based on the recommendations of the task force.

The task force will be assisted by two working groups — one headed by the Director of Enforcement to look into legal violations, and the other led by a Deputy Governor of the RBI Reserve Bank of India to examine the systematic issues.

The first group will have representatives from SEBI, RBI, Ministry of Corporate Affairs, Forward Markets Commission, CBDT-Investigation wing, Serious Fraud Investigation Office, and the Directorate of Revenue Intelligence as members.

The second group will consist of the FMC chairman, SEBI officials and the advisor to the FSDC (Financial Stability Development Council). The Finance Minister referred to these two working groups as committees. The groups will submit their reports by September 7. “Once the two reports come, whatever is under my jurisdiction, I will take action…,” Chidambaram said.

He also said that since developments are unfolding rapidly, “We are keeping a careful watch. We are in touch with SEBI. We are dealing with the situation. And action that is required will be taken.”

Payout plan

From the Rs 190 crore that NSEL has mopped up, 608 investors who need to get up to Rs 2 lakh each will receive all their dues. Another 6,380 investors who have to get between Rs 2 lakh and Rs 10 lakh will get 50 per cent of their dues. The remaining will be paid proportionately, according to the settlement plan.

Meanwhile, Grant Thornton, appointed forensic auditors on Tuesday, has started its investigative work. This is in addition to the internal investigation already initiated against the management team, said the NSEL, which stopped trading on its platform abruptly on August 1.

Analysts fear the stock of Financial Technologies could take a beating on Wednesday because of its decision to give NSEL the loan, though Financial Technologies does not require shareholder approval for the move as it is a business decision. Financial Technologies stock closed down 8 per cent on Tuesday at Rs 132.

suresh.iyengar@thehindu.co.in

shishir.Sinha@thehindu.co.in

(This article was published on August 27, 2013)
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