Payment crisis looms large over NSEL

Business

oi-Sunil

By Sunil Fernandes

Published: Wednesday, August 14, 2013, 8:47 [IST]

Some 13,000 investors in the commodities market of the National Spot Exchange Ltd (NSEL) are bracing for a possible default as worries over the quantity of stock as claimed by NSEL available in its godowns remains questionable.

Brokers including the top notch broking houses of NSEL, who are also the top brokers on the domestic stock exchanges have reportedly visited the warehouses and believe that the stock claimed by NSEL is not available in the warehouses.

There were also allegations in media reports of duplicate and forged bills, which could ultimately lead to some 13,000 investors losing money invested in commodities through the NSEL.

Jignesh Shah, the founder of NSEL is likely to unveil plans on how he is likely to pay Rs 5,500 crores to investors.

According to a report in the Economic Times, The Forward Markets Commission, the regulatory authority, is understood to have spelt this out in a report submitted to the ministry of consumer affairs on Monday.

Problems began when authorities not to offer forward contracts, as a spot exchange is not supposed to do so. However, NSEL was offering forward contracts and after it was banned found it difficult to honour its obligations

NSEL, is a part of the Financial Technologies Group, which also runs the successful Multi Commodities Exchange (MCX). The company has a network of nine exchanges and four ecosystem ventures.

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