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JPC blames CSE officials, systems for crisis

The Joint Parliamentary Committee probing the multi-billion stocks scam said on Tuesday that both the 'system' as well as exchange officials were to be blamed for the March payment crisis at the Calcutta Stock Exchange.

"From information gathered from various quarters and also from our own estimates it is reasonably clear that there was lack of surveillance at CSE, which caused the payment-crisis in March," JPC chairman, P M Tripathi, told reporters after visiting the exchange and seeking the views of the parties concerned.

Tripathi said, "lack of governance cannot be ruled out though some fault may have occurred with the software Installed at CSE. One thing is clear that gadbad (mischief) took place because of the software, but whether it was planted or there was malafide intention needs to be probed. Even if the system was not functioning properly it should have immediately come to the notice of officials.

"I think there is a specific division of duty in stock exchanges, but surveillance is not something that can be actually compartmentalised," he said. "It is our job to find out the culpability of every person concerned and their (extent of) negligence."

Asked whether they felt there was any connivance between the CSE officials and brokers, which led to the payment crisis, Tripathi said, "I don't know how you can separate the two. Saying particularly one was responsible, however, will not be possible at this point."

To a query he said they were really looking at things that they could recommend so that these kinds of incidences did not take place. "There will be definite recommendations in our report, which would be submitted by the end of the monsoon session of Parliament."

Tripathi said the purpose of JPC's visit to Calcutta was to cover both the multi-billion stocks scam and practices at CSE.

This eastern Indian stock exchange came to the limelight in March 2001, when some brokers failed to make pay-ins for settlement number 148 and 149 leading to a payment crisis of Rs 1.50 billion.

The chairman said so far JPC had 25 sittings during which the members had gathered information on technical aspects of stock exchanges and its systems.

"The purpose of the visit to CSE, was first to talk with some persons who headed the exchange and to see how it functions and what are its weaknesses," he said.

The JPC team, including Congress' Manishankar Aiyar, he said, took views of CSE officials, brokers and common investors during the day.

"We also heard IndusInd Bank's views and have sought certain clarifications," he said. "It was not an evidence taking meeting, which will start after some time though we have asked them to submit evidence."

To a query, Tripathi said, "there is not going to be specific recommendation from us as of now. This will happen after proper investigation is complete."

Asked when the team would submit its report, Tripathi said, "the final report will be submitted as soon as possible. It is a dynamic situation and I don't have a specific time-frame though my mandate is to submit the report by end of the monsoon session."

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