Calcutta payment crisis may escalate

Calcutta payment crisis may escalate

Calcutta payment crisis may escalate

MUMBAI, MAR 12: The payment problem on the Calcutta Stock Exchange is unlikely to blow over soon as made out by the exchange authorities. Big bull Ketan Parekh has reportedly backed out from a deal to bail out Calcutta brokers, raising fears of another mega payment crisis involving an amount of Rs 500 crore.

Calcutta brokers had accumulated HFCL shares at high levels. With the prices coming crashing down, they are reportedly not in a position to square up the deals without financial support from outside. Unit Trust of India is also said to be involved in talks to defuse the problems in Calcutta. "The huge unofficial stock deals in Calcutta are complicating the settlement. More defaults are likely to happen in the unofficial market. But this will have ramifications in the official business as well," sources said.

This means Calcutta brokers are facing a payment crisis of over Rs 500 crore in the current week's settlement. "This problem has occurred due to the steep fall in shares like HFCL. It has been hitting 16 per cent downward circuit for the last three days. The problem is likely to spill over to the Bombay Stock Exchange as well. It will be anybody's guess. Nobody is clear about the number of brokers facing trouble in Mumbai and the amount involved," sources said.

"We were apprehensive of an even bigger payment shortfall for the settlement ended on March 8, but this time pay-in is of only about Rs 270 crore spread over a large number of member-brokers unlike the previous occasion when it was concentrated to only a few, and we are confident of a successful completion this time," CSE officials told a news agency.

It may be recalled that last week's payments crisis at the Calcutta Stock Exchange (CSE) was resolved with the brokers squaring up their position late on Friday night and meeting the Rs 95 crore shortfall. The pay-out day, which was on Saturday, went on schedule but the crisis was settled by selling securities of defaulted brokers.

CSE president Kamal Parekh had claimed that a few brokers had "delayed" in squaring up their positions on last Thursday. He was categorical that the brokers had not "defaulted". He said there had been a Rs 95-crore shortfall, which was met by selling Rs 72-crore worth of securities (mostly HFCL stocks). The balance Rs 23 crore was paid up through bank drafts and deposits paid by the brokers. "We have sold Rs 72 crore worth of securities, and the process was completed yesterday (Friday)," Parekh said.

On Saturday evening, the CSE press release said: "The pay-in, pay-out process amounting to Rs 326 crore for the settlement number 2001148 which ended on March 1, has been successfully completed". It also noted that there was no pay-out problem. It was reported that three brokers - former CSE president DK Singhania, Harish Biyani and Arihant Exim - had problems in squaring up their positions.

Parekh said that the brokers met their commitments by selling a chunk of their securities to financial institutions and private investors. It is understood that the Unit Trust of India had bailed them out with an investment of Rs 45 crore. Parekh pointed out that the question of default does not arise as the brokers were well covered through their securities, margin money, deposits, bank, settlement and trade guarantee fund.