Bonds, Currencies & Commodities
NSEL says no discrepancy in e-series stock holdings in vaults

NSEL said it is in the process of providing an exit window for investor to liquidate the e-series units and realise cash payments

Crisis-ridden National Spot Exchange Ltd (NSEL) on Thursday said that its stock positions of gold, silver and platinum, for e-series contracts tallies with depository records and there are no discrepancies in e-series stock holdings in vaults.

 

"In order to facilitate the investors to liquidate the e-series units, NSEL is in the process of providing an exit window to sell their units and realize cash payments, subject to necessary approvals," the Exchange said in a release.

 

NSEL said it has also posted the relevant audit report by Sharp & Tannan Associates on its website.

 

Last month, NSEL sacked its chief executive Anjani Sinha, accusing him of having hushed up the fact that warehousing receipts (WRs) are not backed by physical stock of commodities.

 

According to a report from Business Standard, one crucial difference that everybody overlooked (in NSEL saga) was that these (forward) contracts should have been backed up by the goods in the warehouses. Nobody seemed to verify whether the goods actually existed or not. Brokers started giving out contract notes to hundreds of investors backed against just one warehouse receipt (you cannot split a receipt). The warehouse receipt acted as title to the stock. The broker was taking a risk on the warehouse receipt, the report said.

 

Since the middle of July 2013, trading in NSEL has been suspended. NSEL has failed to make payouts to investors and failed to recover money from those who were supposed to make pay-ins. It now appears that there is not enough stock of commodities in the warehouses of NSEL against which warehouse receipts were issues. In August 2013, trading in e-series was also suspended. This was of concern for large number of investors who had purchased e-series products like e-gold.

 

The Exchange owes its investors at least Rs5,600 crore against investments made in stocks warehoused by NSEL. As a precautionary measure, the government of India on 6th August directed the Exchange to suspend the e-series contracts from trading.

 

E-series contributed about 40% of NSEL’s Rs18,315-crore total turnover in June. E-series contracts is a unique market segment, which functions like the cash segment in equities, but offers commodities in the demat form in smaller denominations.

 

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LIC’s investment in Pipavav Defence down 43%

The RBI governor is expecting more insurance companies to invest in government securities to reduce the pre-emption of bank resources. But it may be a long time away given how LIC does its investments

Pipavav Defence and Offshore Engineering has been locked in the lower circuit for the past eight trading days. Life Insurance Corporation holds a 7.94% stake in the company amounting to nearly 5.85 lakh shares. Last year, in April and May, LIC bought nearly 2.30 crore shares when the stock was around Rs80. The stock has now fallen 43% to Rs44.95. Raghuram Rajan, after taking over as governor of the Reserve Bank of India, announced several measures to liberalise the banking system. One of his hopes is to reduce the pre-emption of bank resources for investment in government securities as he expects penetration of other financial institutions such as pension funds and insurance companies to increase their investment, thus reducing the need for banks to invest in government securities.
 


The new RBI governor mentioned that, “Finally, our banks have a number of obligations that pre-empt lending, and in fact, allow what Dr Rakesh Mohan, an illustrious former deputy-governor, called “lazy banking”. One of the mandates for the RBI in the Act is to ensure the flow of credit to the productive sectors of the economy. In this context, we need to reduce the requirement for banks to invest in government securities in a calibrated way, to what is strictly needed from a prudential perspective.”
 

“This cannot be done overnight, of course. As government finances improve, the scope for such reduction will increase. Furthermore, as the penetration of other financial institutions such as pension funds and insurance companies increases, we can reduce the need for regular commercial banks to invest in government securities,” he mentioned further.
 

Well, this may be a long way off given frequent stories of LIC’s bad investments. LIC’s equity portfolio consists of many blue-chip stocks but a host of public sector companies and dubious investments in beleaguered private companies in the aviation, power generation, infrastructure sectors, which are seeking restructuring of their loans even as their share prices have sagged. The exact details of LIC’s investments are hidden but given the way capital-intensive stocks that populate LIC’s portfolio have performed so far, LIC has not been doing too well with its equity investments. For a bunch of laidback public sectors officials whose jobs are rotated from PR to business to HR and so on and end with a peaceful retirement, to be able to invest smartly seems a bit far-fetched.

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COMMENTS

bhaskar

3 years ago

Proably also calculate the percentage these dud stocks make up in LIC's overall stock portfolio. Proably they are taking a convex bet that if these turn out to be a multibagger they have much to gain, likewise if they goto zero they have not much to lose.

RTI Amendment Bill referred to Standing Committee

MPs Baijayant Panda, Ajoy Kumar, Dinesh Trivedi and Omar Abdullah, along with several prominent activists have opposed the amendment in RTI Act to keep political parties out of gambit of the law

Finally a better sense prevailed in the Parliament and the Right to Information (RTI) Amendment Bill, which aims to keep the political parties out of the ambit of the transparency law, was on Thursday referred to the Standing Committee for further consideration.

 

Several members of Parliament (MPs), including Dinesh Trivedi, former minister for railways and TMC leader, Baijayant Panda of the Biju Janata Dal (BJU), Ajoy Kumar of Jharkhand Vikas Morcha (JVP), and Rajeev Chandrasekhar, an independent MP, along with RTI activists have been demanding the Amendment Bill to be sent to the Parliamentary Standing Committee to facilitate public consultation.

 

V Narayanasamy, minister of state for personnel, public grievances and pensions, said, "The government has decided that there should be more discussion on this Bill. We will bring this Bill in Parliament in the Winter Session."

 

The Right to Information (Amendment) Bill 2013 was introduced on August 12 in the Lok Sabha by Narayanasamy but could not be discussed amid repeated adjournments in Parliament.

 

The Union Cabinet had last month cleared a proposal to amend the RTI Act to give immunity to political parties and negate a Central Information Commission (CIC) order to this effect. The government has proposed an amendment in Section 2 of the act, which defines public authority, to shield the political parties.

 

The amendment to the RTI bill was necessitated following a 3rd June order by the Central Information Commission (CIC) stating that six national political parties, All India Congress Committee, Bharatiya Janata Party (BJP), Communist Party of India (Marxist) (CPI-M), Communist Party of India (CPI), Nationalist Congress Party (NCP) and Bahujan Samaj Party (BSP, would be brought under the RTI Act as they were public authorities.

 

Many RTI activists have opposed the proposed amendments. Aruna Roy, a former member of the Sonia Gandhi-led National Advisory Council (NAC) and met the PM in this regard. Sources say the Congress president changed her mind after Roy's comments and said there should be more consideration. There were also, reportedly, multiple views within the Congress party.

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COMMENTS

nagesh kini

3 years ago

Thanks to the concerted efforts of the activists the RTI Amendment has been consigned to the back burner awaiting the new govt. in 2014!

hasmukh

3 years ago

Various RTI activists need to be complemented for halting the amendment. Most of the political leaders (all parties) are shameless and do not respect views and feelings of the Public, who have elected them.

nagesh kini

3 years ago

If only the UPA2 in whatever wisdom is left with them has sincerely taken the Opposition and the aam janata on board instead of adopting a confronting attitude our GDP would have attained double digit much earlier.
The DTC that has cleared all the Select Committee with the last one with recommendations from former FM Yashwant Sinha who came out with extremely valuable suggestions, is still hanging fire. Now that another vital enactment the Cos. Bill is at last signed, sealed and delivered for God's sake the DTC needs to be enacted here and now.

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