Unfolding of the NSEL episode

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SummaryOutcome of Rs 5,600 cr payments crisis will have its bearing on NSEL promoters being 'fit' to run other exchanges.

the producer members along with FMC officials and brokers on August 4, 2013, NSEL proposed its first settlement plan spread over five months. It said that eight of its members agreed to pay their dues of R2,181 crore by due dates or earlier. As per broker estimates these funds were likely to come through by mid-September given the settlement dates of their trades. Another set of 13 members offered to pay 5% of their outstanding every week effectively paying R3,107 crore of their total dues over five months. The delayed payments attracted a 16% penalty as per NSEL. The rest of the outstanding amount pinned at R311 crore is owed by three entities that are still in negotiations with NSEL. The exchange has asserted that members who do not cooperate with the exchange may face FMC action and all possible legal recourse would be taken.

On August 14, 2013, NSEL announced a second settlement plan under the direction of the FMC. The plan included the settlement of R4,200 crore in dues over a period of 20 weeks with each week seeing a payout of R174.72 crore. This would be followed by R86 crore in settlement over the next 10 weeks. NSEL also said that over this 30-week period, the remaining dues of R1,219.71 crore would be settled via sale of commodities, fixed assets and land by some members.

Has NSEL stuck to the settlement plan?

NSEL has partially defaulted on the first three scheduled payouts. It disbursed R92.73 crore as part of the first payout. And R12.05 crore and R15.32 crore were disbursed in the second and the third payouts, respectively.

Meanwhile, NSEL decided to pay R177.23 crore to small investors by taking a bridge loan taken from its parent company Financial Technologies India Ltd (FTIL). As part of this plan, 608 small investors who were to receive up to R2 lakh each will be paid in full. Another 6,380 investors who had to be paid R2 lakh to R10 lakh will receive 50% of the amount. These investors will receive the remaining amount proportionately as per the settlement plan.

SGS, the Swiss firm appointed by NSEL in early August in its preliminary findings, is believed to have found only 15% of the reported stocks at 23-odd warehouses inspected. NSEL has declared 19 entities as defaulters and initiated default proceedings against them.

How far have the investigations on the NSEL crisis proceeded?

The NSEL board has sacked

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