Mumbai: The economic offences wing (EOW) of the Mumbai police on Monday said it had summoned representatives of three brokerages to appear before the agency within the next three days in connection with the Rs5,574.35 crore payment crisis at the National Spot Exchange Ltd. (NSEL).

These brokerages are Nirmal Bang Commodities Ltd., Ventura Capital Ltd. and Best Deal Commodities Ltd.

The agency is also planning to summon representatives of at least three other brokerages—Anand Rathi Commodities Ltd., Motilal Oswal Commodities Broker Pvt. Ltd. and Geojit Comtrade, saying it had found discrepancies in the books of accounts of these brokers.

“We have asked Anand Rathi, Motilal Oswal and Geojit to submit more documents in the NSEL case for scrutiny," said Balsing Rajput, EOW deputy commissioner. “They will be subsequently summoned."

Motilal Oswal, chairman and managing director of Motilal Oswal Financial Services Ltd., and C.P. Krishnan, a whole-time director at Geojit Comtrade, did not answer calls made to their cellphones. An Anand Rathi spokesperson was not immediately available for comment.

The settlement crisis at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts, which 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 who used the paired contracts as a way to raise easy money. With trading suspended, 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 successful payout ever since.

Close