NSEL auditor says co defaulted on loans for last 2.5 yrs

Grant Thornton, the firm conducting the forensic audit of National Spot Exchange Limited (NSEL) has found that the borrowers were actually defaulting for last 2.5 years, reports CNBC-TV18’s Varinder Bansal quoting sources.

Also read: ICAI begins scrutiny of FTIL, NSEL issues

The exchange, however, continued to conduct business inspite of being aware of  all these irregularities. This development could be damaging as Deloitte Haskin & Sells, the auditor of Financial Technologies said on Tuesday that FTIL’s FY13 account should not be relied upon.

However, if Grant Thornton’s findings are correct, it is likely that NSEL’s books for the last 2.5 years maybe scrutinised and questioned.

Additionally, it was found that the NSEL board gave a corporate guarantee to banks to give loans to borrowers & the margin requirement’s were waived to increase its business.

This again is a serious violation by the crisis hit exchange. However, nothing has perturbed Financial Technologies managing director Jignesh Shah who said in the AGM today that he cannot comment whether the NSEL management made a mistake or not and that he is doing everything to resolve the crisis within 6 months.

What came as a surprise to some investors was his statement that the liability of the default does not lie with the exchange but on the borrowers and that Financial Technologies , the promoter of NSEL, has nothing to do with the issue.