A letter addressed to Shikha Sharma, managing director and chief executive officer (CEO) of Axis Bank, mentioning account details of some of NSEL defaulters including Mohan India, Tavishi Enterprises, Spin-Cot Textiles to name a few, stated: “Few entities in connivance with some of the exchange senior officials compromised with the risk management system of the exchange and defaulted in their obligation. They sold goods, which were supposed to be in their warehouse and received the money in lieu of sales. However, after the exchange operations were closed on July 31, 2013, it was found by an audit agency appointed by the board of NSEL found no goods in warehouses.”
This fraudulent activity led to an unprecedented settlement crisis of Rs 5,647 crore on NSEL. This matter is being investigated by the Economic Offences Wing (EOW) of the Mumbai Police and the Enforcement Directorate (ED).
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Mentioning the details of outstanding dues of defaulters, the letter urges banks to maintain precautions while dealing with such clients, the letter said.
NSEL further warned that in case of any cash credit (CC) limit given to these defaulters by Axis Bank the same may be cancelled/ stopped to protect default. Also, in case of any assets pledged against the CC limit or any loan given to them the details of the same may be provided to EOW and NSEL.
“Hence, in the interest of thousands of small investors and as a sound banking practice at your bank may kindly review and stop the banking facility including CC limit / short and long term working capital loan) extended to them in view of their outstanding liabilities and help us in recovering the money. This would help sending a strong message to the industry and to build pressure on the defaulting entities to settle their obligation,” an NSEL official said.
| NSEL defaulters’ account details with Axis Bank | ||
| Name | Account type | Branch |
| Tavishi Enterprise | Corporate | Saraswati Vihar, New Delhi |
| Tavishi Enterprise | Settlment | -- |
| Mohan India | Current | Pitampura, New Delhi |
| Mohan India | Settlement | -- |
| Spin-Cot Textiles | Current | Kharatbad, Hyderabad |
| Spin-Cot Textiles | Client | Kharatbad, Hyderabad |
| Spin-Cot Textiles | Settlement | Fort, Mumbai |
| Metkore Alloys & Industries | Client | Banjara Hills, Hyderabad |
| Metkore Alloys & Industries | Settlement | -- |
| Source : NSEL | ||
Meanwhile, Crisil recently downgraded credit risk profiles of Dunar Brand basmati rice from B+ earlier to B- now due to mentions of its promoter P D Agroprocessors in the NSEL defaulter’s list. The downgrade reflects deterioration in Dunar's business risk profile on account of attachment of the Dunar brand (owned by Dunar's group company PD Agroprocessors by the EOW because of its involvement in a scam on the NSEL. The rating downgrade also reflects significant deterioration in Dunar's management risk profile on account of arrest of its managing director Surendar Gupta by EOW, Crisil said.
Dunar brand basmati rice has total term loan of Rs 36.45 crore as on today with Rs 20 crore standby line of credit, apart from cash credit of Rs 215.5 crore export packing credit of Rs 23 crore.
NSEL is facing a Rs 5,600-crore payment crisis involving over 33,000 investors in various schemes offered by it.