Small traders want brokers to participate in FTIL offer

Abbey Rodrigues, an Ahmedabad based trading client of the scam hit National Spot Exchange Ltd (NSEL), wants brokers to participate in the settlement offer made recently by NSEL promoter Financial Technologies India (FTIL) to help clear dues of small traders.

“It is a good proposal and brokers must participate. They are the ones who made us invest in NSEL where our money got stuck. I am a salaried class. It was brokers who prompted us to invest for higher returns. Therefore, brokers must come forward to settle our dues,” said Rodrigues who have received half of their total trade value of Rs 400,000.

Of the so called 12,735 trading clients, 11,954 have invested less than Rs 1 crore in NSEL to make quick bucks. According to NSEL data, their accumulative claims as on today stand at Rs 1,509 crore.

The remaining 779 high networth individuals, however, accumulatively claim that NSEL owe them to the tune of Rs 3045.19 crore. There are only two public sector undertakings. Their joint receivables as on today stand at Rs 320.81 crore.

Of 11,954 small trading clients, Business Standard spoke to around a dozen who unanimously urged brokers to participate in FTIL offer for speedy clearance of their dues.

Suresh Dayalal Ajmera, a Mumbai-based small trader whose total receivable in July 2013, at the time when scam broke out, stood at Rs 450,000, wants both FTIL and brokers to come together and derive a joint formula to pay small investors fast.

“We are waiting for someone to pay us. Once FTIL makes an offer, brokers must accept it and settle dues of small trading clients like us,” said Ajmera.

In a proposal submitted to the Ministry of Corporate Affairs last month, FTIL, subject to certain clearances and approvals, proposed to pay 100% to small trading clients with an investment between Rs 2 and 10 lakhs (6445 total).

The proposal said, such clients would receive their money in less than four weeks provided brokers also participate with at least Rs 500 crore of initial contribution with equal amount coming in from FTIL.

Clients (total 4901) with investment between Rs 10 lakh and 1 crore, however, proposed to be paid 50% of their dues accumulatively to the tune of Rs 672.5 crore.

While two public sector undertakings with an accumulative receivables of Rs 320.81 will also get 100%, 779 high networth individuals (HNIs) would receive at least 50% from this offer.

Thus, almost all clients would get at least 50%. For the remaining, however, both FTIL and brokers should make joint effort through disposal of attached properties of defaulters and distribute the proceeds.

“Why should we participate in any such offer ?” asked Alok Churiwala, BSE Investors’ Forum and added, “The onus of clearing dues lies with FTIL.”

In its response, FTIL said that investment in NSEL is a negative returns. If brokers join hands, all clients would start getting their money in 3-4 weeks, FTIL added.