NSEL has invoked ‘default clauses’ agreed upon with defaulters Mohan India Group and Vimladevi Agrotech for recovering about Rs913 crore
Crisis-hit National Spot Exchange Ltd (NSEL) said it has decided to liquidate assets of two of its defaulters — Mohan India Group and Vimladevi Agrotech, who together owe around Rs913 crore.
The development comes following the order issued by commodities regulator Forward Markets Commission in August 2013, which is monitoring recovery of dues of about Rs5,600 crore at NSEL.
“To accelerate recovery, NSEL has started the process of liquidation of attached assets of defaulting borrowers. As a first step, assets of Mohan India Group and Vimladevi Agrotech will be liquidated to recover dues,” an NSEL official said.
NSEL has invoked the ‘default clauses’ agreed upon with defaulters Mohan India Group and Vimladevi Agrotech in the settlement agreement signed recently, the official said.
The crisis-hit exchange has initiated the liquidation process to ensure that the recovery process did not reach a stalemate, the official added.
Mohan India Group, one of the biggest defaulters in the NSEL payment crisis, has a total outstanding of Rs922 crore. It had agreed to settle Rs771 crore and could pay only Rs23.9 crore till date.
NSEL has decided to liquidate Mohan India’s properties in Civil Lines in Delhi and Bikaner in Rajasthan. “Besides, NSEL has also written to the Income Tax Department in Delhi to release Rs59 crore from Mohan India as per the MPID court order on 8 January 2014,” the NSEL official said.
Vimladevi Agrotech owes about Rs14.02 crore to NSEL and so far has paid only Rs8 lakh leaving a balance amount of Rs13.94 crore.
To recover the dues, NSEL will be liquidating the company’s soyabean plant in Kota worth around Rs14 crore, the official added.
NSEL suspended trade in July last year after two dozen counterparties declared their inability to settle payments amounting to Rs5,600 crore to more than 13,000 investors.
As of 28th January, NSEL has settled claims worth Rs308.33 crore to its investors.
In its probe SEBI found that SMC Global Securities had collected margins in non-permissible forms from the trading members which resulted in short collection along with wrong reporting of margins
The Securities Appellate Tribunal (SAT) on Friday upheld market regulator Securities and Exchange Board of India (SEBI)'s order restraining SMC Global Securities from taking up any new assignments in view of the violations related to reporting of margin and delay in collection of dues from trading members.
SEBI had found that SMC Global Securities failed to collect requisite margin money from two trading members Sunchan Securities and Ganga Yamuna Finvest, and that it had allowed them to take additional positions.
Accordingly, in August 2013, SEBI had prohibited SMC Global Securities from taking up any new assignment or contract and launching a new scheme for three months following which the entity had filed an appeal with SAT against the ruling.
In an order, SAT ruled that it has found "no reason to interfere with the (SEBI's) impugned order, which is hereby upheld, and the appeal is dismissed...."
Among others, SAT noted that brokers Sunchan and Ganga Yamuna continued to default in fulfilling their margin obligation towards SMC Global Securities and the entity went on giving excessive exposure to the two trading members "which has been rightly viewed seriously by SEBI".
The tribunal observed that margin money played an important role in containing risks which are inherent in the functioning of any capital market.
"Owing to its non-adherence, huge market crashes have been witnessed all over the globe in the recent past," SAT said.
"It is, therefore, pertinent for all market players to maintain the sanctity of margining as a risk management tool while dealing in securities, be it in the cash or in the F&O (Futures & Options) segment," it added.
After receiving complaints from investors, SEBI had directed the NSE to examine the matter. Besides, the regulator had also initiated a probe.
SEBI, in its probe, found that SMC Global Securities had collected margins in non-permissible forms from the trading members which resulted in short collection along with wrong reporting of margins.
This shortfall in the collection of required margins from trading members indicated that the same was funded by SMC Global Securities to maintain the margin obligations.
In its submissions to SAT, SEBI said due to the default by the two trading members "the stock exchanges had to redress investor complaints/claims by utilising funds from the Investor Protection Fund to make good the claims of the clients of Sunchan and Ganga Yamuna".
Satya Pal Singh, who was due to retire next year, is reportedly considering contesting the upcoming Lok Sabha polls either from Mumbai or Uttar Pradesh, his native state
Mumbai Police Commissioner Satya Pal Singh has resigned from service amidst reports that he was keen on contesting the Lok Sabha polls. While there are speculations that he may join either the Bharatiya Janata Party (BJP) or Aam Admi Party (AAP), Singh, in an interview to ABP News, has praised Narendra Modi.
On Thursday night, the 1980-batch officer from the Indian Police Service (IPS) submitted his resignation letter to the Maharashtra Home Ministry, which forwarded it to the chief minister's Office for acceptance.
Singh, who was due to retire next year, is reportedly considering contesting the upcoming Lok Sabha polls either from Mumbai or Uttar Pradesh, his native state.
There was no confirmation from Singh on his political foray but according to some reports, he has offers from BJP as well as Arvind Kejriwal-led AAP.