FMC to NSEL: Auction defaulters’ assets

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SummaryNSEL has been able to pay only Rs 92 crore out of the scheduled Rs 174.72 crore.

The Forward Market Commission (FMC) on Wednesday ordered the National Spot Exchange Ltd (NSEL) to declare the members who failed to make payments as defaulters and auction the commodities lying in the accredited warehouses of the exchange as collateral.

It directed NSEL to ask the defaulters to “hand over their books, documents, papers, assets, cheque books and other documents for the benefit of the creditors and proceed to liquidate all realisable assets of the defaulter members to meet their pay-in obligations”.

FMC’s direction comes a day after NSEL defaulted in the first tranche of payments to investors. NSEL was able to pay only Rs 92 crore out of the scheduled Rs 174.72 crore. The exchange had informed that nine members (buyers) did not pay their dues.

FMC asked NSEL to bring to “the notice to the commission any deficiency being found by the Collateral Management Agency appointed by you with regard to quality and quantity and value of the stock lying in the accredited warehouses of NSEL”.

Speculation is rife that warehouses don’t have the required quantities of commodities. “The proceeds of commodities auctioned and realisation of assets of defaulter in shortest possible time should be deposited in escrow account and should be paid to selling members with the approval of the commission,” FMC said in a letter to the NSEL board.

The nine members which defaulted in making payments are Ark Imports Pvt Ltd, Loil Overseas Foods Ltd, Lotus Refineries Pvt Ltd, N K Proteins Ltd, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates. The exchange should have processed to declare the members who have failed to meet their pay-in obligation as ‘defaulters’ as per the bye-laws and rules of the exchange and should have closed out their outstanding position on the exchange, FMC said.

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