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CSE in crisis, building may be mortgaged

A severe crisis gripped the Calcutta Stock Exchange on Monday with the authorities planning to mortgage its building to raise money if necessary following the recent payment crisis.

CSE President Kamal Parekh, who called an emergency meeting of member-brokers, admitted that a payment crisis had taken place for two consecutive settlements, 148 and 149, for which the exchange authorities had to liquidate the Trade Guarantee Fund (TGF) partially.

Meanwhile, as per instructions of Sebi officials, who were investigating transactions, blocked the pay-out of substantial number of brokers under settlement number 149.

A broker, who was present at the meeting, said that pay-out for 26 accounts had been blocked as investigations were on.

If the accounts were found to be linked to those of the four defaulters, then their money would be impounded, Parekh told brokers.

Venting their ire against the media, the CSE authorities kept the press out of bounds and security personnel were also instructed to use force if required.

Parekh assured the panic-stricken brokers that in any eventuality, the base minimum capital of the members would not be touched and there was no plan to ask for additional base capital from them.

Parekh said mortgaging of the CSE building was one of the options which the committee had planned to exercise if other avenues for resource mobilisation were not adequate.

CSE had already liquidated TGF to the extent of Rs 220 million out of a total corpus of Rs 850 million, besides invoking brokers' guarantees.

At the meeting Parekh also sought to soothe the apprehension of brokers that the CSE governing committee was trying to protect the defaulters.

He said that stringent action would be taken against the defaulters once they were detected.

The exchange, however, was yet to formally announce the names of defaulters, the list of which included names like Dinesh Singhania, Ashok Poddar, and Harish Biyani.

A number of brokers, after coming out from the meeting, alleged that the CSE authorities were out on a face-saving exercise and nothing would be done in reality.

Meanwhile, the reported suicide of a sub-broker, Avijit Banka, and his wife for incurring huge losses also cast a pall of gloom among the brokering fraternity.

Former CSE President, Ajit Dey, said it was 'really shocking' and this would clearly depress the sentiments of the brokers.

Volumes on the exchange dipped substantially during the day with a majority of brokers switching from CSE terminals to NSE and BSE screens.

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