Home > politics > policy > NSEL case: EOW quizzes former chairman, to summon brokers

Mumbai: The economic offences wing (EOW) of the Mumbai police on Friday said it was interrogating Shankarlal Guru, former chairman of the National Spot Exchange Ltd (NSEL), in connection with the 5,574.34 crore payments crisis at the commodity spot exchange .

“We have sent a team of officers to Ahmedabad to question Guru at his residence," said Balsing Rajput, deputy commissioner of the EOW.

According to Rajput, another team of EOW officials on Thursday attached the properties of Spincot Textiles Pvt Ltd in Andhra Pradesh.

The EOW said it would also summon a few brokers in connection with the payment crisis at the NSEL before filing its charge sheet in the case.

Rajput said the investigative agency had also recorded the statements of at least 10 investors affected by the NSEL crisis.

Meanwhile, three of the 24 borrowers of the commodity spot exchange have informed the EOW that they are in the process of repaying their dues to the NSEL. The three borrowers were identified as Yathuri Associates, PD Agroprocessors Pvt Ltd and Aastha Minmet Pvt Ltd.

The settlement crisis at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts. These, too, were suspended a week later. The closure of trading may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts. A spot exchange isn’t supposed to do so, but NSEL was doing that.

NSEL tried to implement the change but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend all trading. It later emerged that all trading on NSEL happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity.

The entities selling on spot and buying futures were planters or processors and members of the exchange. It turned out there were only 24 of them, and they used the paired contracts as a way to raise easy money. When the trading was suspended, the investors were left holding contracts that the members couldn’t buy because they didn’t have the money to do so.

On 14 August, NSEL proposed a payout plan, but it has been unable to stick to the schedule and has not made a single complete payout since.

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