Mumbai: The National Spot Exchange Ltd (NSEL) has asked member-brokers to provide proof of disbursement made to clients who had dues of less than 10 lakh each. In August, Financial Technologies India Ltd (FTIL), which owns 99.99% of NSEL, extended a bridge loan of 179 crore to NSEL to arrange for the pay-out to such clients.

“The National Spot Exchange Ltd (NSEL) on Wednesday sought from its members to provide details/documentation on the proof of disbursement and KYC (know your client) forms of their respective trading clients to whom 179 crore special payout was made. The exchange has set the deadline for sending the proof as on or before March 13, 2015," said a statement issued by the exchange.

The bridge loan was extended to the spot exchange on 27 August 2013 to settle and clear the dues of trading clients with dues up to 2 lakh and 50% of those with dues above 2 lakh and less than 10 lakh.

According to the NSEL statement, the exchange issued two circulars—one each in December and January—to members seeking information related to disbursements but only a few members responded with details. The exchange plans to initiate disciplinary action against members if they fail to provide the required information before the deadline.

The statement quoted Prakash Chaturvedi, joint managing director, NSEL as saying that the poor response from the members also hints some brokers could have acted as fronts by using the name and permanent account number (PAN) of other entities to enter into “benami dealings."

Brokers and investors have consistently claimed around 13,000 of them were affected by the fraud. “The paltry response we have got despite an all-out effort by the NSEL and even after dispatching the notice twice puts a question mark on the genuineness of claims. We have reason to believe that it is necessary to ascertain the genuineness of 13,000 numbers. It is a very big question mark. We have requested the Ministry of Corporate Affairs to conduct investigations to verify the genuineness of 13,000 numbers before considering the draft merger order," Chaturvedi said in the statement.

The reference to the draft merger order is an allusion to the ministry’s plan to merge FTIL and NSEL.

The 5,574.34 crore payment fraud at NSEL came to light on 31 July 2013 when the exchange suspended trading in all but its e-series contracts. These, too, were suspended a week later. On 14 August 2013, NSEL proposed a payout plan, but it has been unable to stick to the schedule and has not made a single successful payout.

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