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Commentary

NSEL Defaults Again, FT Loans 177 cr. to Pay Back Small Investors

NSEL has defaulted a second time, this time paying out just Rs. 12.60 cr. after last week’s payment of about half of what it should have paid (Rs. 174 cr.)

What has happened though is that Financial Technologies has given a bridge loan to NSEL, who will use the money to pay out “small investors” a total of Rs. 177.3 cr.

  • Those owed less than Rs. 200,000 will get all their money (608 investors)
  • Those owed between Rs. 200,000 and Rs. 10 lakh (1 million) will get 50% of what is owed (6,380 investors).

This is of course unfair to those investing more, but at least the smaller sums are coming through.

Meanwhile Grant Thornton have been appointed as forensic auditors. But they seem to have relationships with Financial Technologies (NSEL’s promoter) in that they are actually mentioned as an FT customer.

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Of course, Grant Thornton is an international firm, with the only thing against them being that they just settled a case where they were accused of helping conceal a $1 billion fraud at Winstar Communications in the US in 1999. Grant Thornton had found “red flags” but still gave an unqualified audit opinion that Winstar followed all GAAP rules, even though the deceptive scheme was known to them. (They settled but didn’t admit guilt)

NSEL has defaulted twice. The government has set up two committees. No legal cases. No one’s gone to jail. FT continues to run exchanges even though their owned exchange has defaulted. It’s not a crisis yet as much as it is a betrayal of trust.

  • alok says:

    This money ftil has loaned which is not coming back amounts to about 40 rs per share of ftil. Expect sharp down move in ftik today as ftil has admitted liability towards nsel fot the first time..

  • Swan says:

    I think FTIL has taken balanced move wherein they can fight back on fit and proper with any court or regulators virtually claiming they have bailed out small investors. Any court or regulators in India will take a positive note of this. for big investor there is no better option but to settlement with FTIL which seems to be in the process.