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NSEL says no discrepancy in e-series stock holdings in vaults

2 min read . Updated: 06 Sep 2013, 12:00 AM IST Anirudh Laskar

To help investors liquidate the e-series units, NSEL is in the process of providing an exit window to sell their units and realize cash payments. Photo: Ramesh Pathania/Mint (Ramesh Pathania/Mint) — To help investors liquidate the e-series units, NSEL is in the process of providing an exit window to sell their units and realize cash payments. Photo: Ramesh Pathania/Mint **(Ramesh Pathania/Mint)**

The exchange said its stock positions in gold, silver and platinum for e-series contracts tally with depository records

Mumbai: The crisis-ridden National Spot Exchange Ltd (NSEL) on Thursday said in a release that according to an audit report by Sharp and Tannan Associates, there is no discrepancy in the exchange’s e-series stock holdings in vaults.

NSEL that owes ₹ 5,572 crore to investors in the form of payouts towards trade settlement, said its stock positions in gold, silver and platinum for e-series contracts, which were suspended for trading on 6 August, tally with depository records.

To help investors liquidate the e-series units, NSEL is in the process of providing an exit window to sell their units and realize cash payments.

As per the exchange’s instruction, a physical verification of stocks of precious metals lying with Brinks Arya India Pvt. Ltd at its vaults in Mumbai, Kolkata, New Delhi, Hyderabad, Ahme-dabad and Jaipur was conducted by Sharp and Tannan between 26 August and 31 August, an NSEL update on its website said.

However, the release added there is a backlog in settlement due to redemption pressure.

National Bulk Handling Corp. Ltd (NBHC), in a statement on Thursday said: “In the light of NSEL development, most of the banks have conductedare conducting audits of their stocks in NBHC’s warehouses and no deviations have been found… Clients are welcome to visit the warehouses to check their stocks, to quell any fears whatsoever."

NBHC, however, said it did manage stocks at five warehouses of pre-stored commodities for NSEL in June and July, but did not issue any warehouse receipts against these stocks. NBHC added that it has given back the warehouses to NSEL along with balance stocks, and as on 5 september it had stocks worth ₹ 65 lakh on behalf of NSEL.

The firm, which provides commodity and collateral management services along with its stakeholders—FTIL, group firm Multi Commodity Exchange of India Ltd (MCX), and State Bank of India —said it manages about ₹ 5,500 crore worth of stocks, of which about ₹ 4,200 crore of stocks are funded by banks to commodity owners such as farmers, processors and traders.

NBHC further clarified it acts as a warehousing service provider for MCX, which accounts for 5-7% of NBHC’s total stock.

“The firm gives banks a guarantee that it will maintain the quality and quantity of the stock during its tenure… It may also be noted that cumulatively, banks have lent about ₹ 35,000 crore against NBHC’s warehouse receipts of about ₹ 50,000 crore, out of which loans worth about ₹ 32,000 crore have been repaid in the past 6-7 years," NBHC said in its statement.

ABOUT THE AUTHOR

Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.