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CSE completes Rs 326-crore pay-out

The Calcutta Stock Exchange Saturday announced completion of a payment settlement involving Rs 326 crore to clear any doubt about the payment crisis which triggered off a country-wide crash in stock markets on Friday.

"The pay-in, pay-out process amounting to Rs 326 crore for settlement number 2001148 which ended on March 1 last has been completed," a CSE press release said.

Reports of a payment default of Rs 94 crore involving four stock brokers of CSE had led to collapse of stock markets across the country on Friday. The BSE Sensex fell by 235 points in a repeat of the Black Friday syndrome and then recovered marginally at the end after emergency rescue efforts were launched by the CSE authorities.

The CSE, however, tried to underplay the payment crisis with its President, Kamal Parekh, stating that there was no default in payment, but only a "delay".

Parekh told PTI, "It was not a default, but a delay, and the crisis took place as the brokers were unable to arrange payment as Friday was a holiday".

The CSE also said in its release, "We would like to reiterate the fact that there was no pay-out problem for the aforesaid settlement as reported in a section of the media."

Asked how the crisis was overcome, Parekh said the bourse had arranged for sale of securities to private investors and institutions to cover a major portion of the total payment shortfall.

This, he said, helped to meet Rs 72 crore out of the total shortfall of around Rs 94 crore. The balance was generated from bank deposits, he said.

Parekh said that the Trade Guarantee Fund and bank guarantees on account of brokers were not touched.

The CSE, he said, was ready to face any eventuality as the TGF and margin money collected by the exchange amounted to Rs 600 crore.

The brokers' accounts which caused the crisis and subsequently diffused were of Harish Biyani, Arihant Exim, Ashok Poddar and Dinesh Kumar Singhania.

Meanwhile, the Securities and Exchange Board of India will examine in detail the payment crisis on the CSE, senior SEBI officials said in Bombay on Saturday.

"The problems about payments at CSE have been solved and difficulties were blown out of proportion. This instance (payment crisis) needs a follow-up," SEBI sources told PTI.

They, however, refused to say whether the "follow-up" would be an independent probe or part of the on-going investigations by SEBI into the March 2 stock meltdown and alleged price manipulation on the Bombay Stock Exchange.

The CSE officials have assured that the next settlement would be completed without any problem, they added.

The SEBI surveillance team was still working on transcripts of conversation between BSE top office bearers and staff members in the exchange surveillance department.

The investigations into the crash were on despite a severe shortage of staff, they said, adding that the probe would be completed at the earliest.

A 40-member team drawn from SEBI, BSE, NSE and exchanges at Calcutta, Delhi was investigating the crash.

The number of entities being probed totalled 14, including two foreign broking houses, but this figure may go up as the investigations progress, sources said.

PTI

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