 "E-series investors on tenterhooks")
Following the Rs 5,600 crore payment crisis caused by insufficient stocks in physical commodities such as sugar, rice and wool, NSEL also suspended trading in e-series contracts on August 6. Following this, investors were told those having exposure to contracts such as e-gold and e-silver could opt for physical delivery if they wanted to close out positions.
Business Standard has learnt from investors in e-series contracts that they have neither got their money back nor are the balances showing in their demat accounts. “While the broker says he has forwarded the request to NSEL, the NSEL officials in Delhi say the settlement has to come from headquarters. It has been 15 days and I have not even got any acknowledgement of my delivery request,” said Neeraj Rajput, a Noida-based investor who had positions in e-silver.
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According to Rajput, now that the broker has transferred the position to NSEL, even the demat account did not reflect the position. “The NSEL staff have also started behaving funny. They said they can’t give a timeline and even said, Jo karna hai karlo (Do whatever you want to)’. This is not what I signed up for.” Rajput, who works with an asset management company, is considering filing a First Information Report (FIR) against the exchange.
A Delhi-based NSEL official, who is handling deliveries, said: “Deliveries are happening. But there is a delay because clients bring small denominations such as 100 gms. I have a bar of 30 kg. I try to cut it to size and give it. In some cases, it takes up to 20 days.” He declined to give details of the amount of delivery he has executed so far.
He added they are advising clients of industrial metals such as copper, zinc, etc, to wait because, “Even if they take delivery of these metals, they will lose 15-20 per cent in taxes and transaction charges. We are telling them that an auction window will be opened after clearance from the authorities”.
On Thursday, NSEL said the settlement backlog was due to redemption pressure. It said it was in the process of providing an exit window for investors to sell their units and realise cash payments, subject to necessary approvals.
An audit report on the NSEL website says CDSL and NSDL have together demated precious metals and according to their demat register matched with the NSEL entries the auditor has found 46.16 tonne silver, 910 kg gold and 19 kg platinum in physical form which matches with the demat certificates issued by both depositories.
The audit report, however, does not disclose stock of other metals which have been held in demat by NSEL investors.
Alok C Churiwala, vice-chairman of BSE Brokers Forum, said, “We are hearing a lot of serious concerns expressed by our members. As there is an inordinate delay and some silly reasons are being put out, people are beginning to question if there are adequate gold stocks and, if so, why is there such a delay in rematerialising these.”
Churiwala added that there has not been any proper official response from the exchange in the matter. “When small investors ask, they say big investors are being given preference and vice-versa. Some people in the know said neither small nor big is getting anything.”
According to brokers, while the total exposure in the e-series contracts are lesser at about Rs 300-400 crore, the number of investors who have exposure to this product could run into hundreds of thousands.
In an interview last year, former NSEL chief Anjani Sinha had said that over 700,000 investors had exposure to e-gold and the daily volumes were in excess of Rs 150 crore, whereas the e-silver volumes were at Rs 250 crore a day.
Under e-series, NSEL offered precious metals in the demat form in smaller denominations. The clearing and settlement pay-in and payout mechanism is based on T+2 settlement cycle. T+2 settlement cycle means that the final settlement of transactions done on the trade day takes place on the second business day.
E-series products provide opportunity for intra-day trading, coupled with demat delivery in respect of positions outstanding at end of the day. NSEL offers e-series contracts in gold, silver, copper, zinc, lead, nickel and platinum.