New Delhi, Dec. 19: Reliance came under scrutiny of the Joint Parliamentary Committee set up to probe the multi-crore stock scam, following submission by Sebi that its broking firm Reliance Shares and Stock Brokers Limited, the biggest participant in automated lending and borrowing mechanism, withdrew Rs 1,900 crore within 10 days from the market.
Commenting on the volatility in the market, the report said, “In the committee’s view, whatever the reasons for non-deployment, such huge withdrawal of funds from the market could adversely affect it.”
The JPC also said that “it was contended (by Sebi) that their (RSSBL) orders in the market worth Rs 780 crore did not get executed though their total investment offered in February 28, 2001, was in excess of Rs 1,700 crore.”
Sebi’s investigations under instructions from the JPC to examine whether the facility of withdrawal of securities under ALMB was misused revealed that RSSBL was the major participant, comprising 39 per cent of the total ALBM volumes during 2000-01. It also comprised 65 per cent of the total pure borrowing transactions in ALBM during October 2000 till March 2001. Therefore, the examination of ALBM on the NSE was restricted to transactions of RSSBL and its main client—Reliance Petroleum, Sebi said, adding the total cumulative ALBM volumes of RSSBL stood at Rs 33,287 crore in this period.
Although Sebi chairman (D. R. Mehta) said that “one is entitled to withdraw the money if the activity is legal,” a representative of the market watchdog admitted during evidence that the financing aspect of ALBM was left out in the risk management system and was not examined, the report said. The issue was raised by big bull Ketan Parekh in a written reply where he said if Rs 2,000 crore was withdrawn in a span of 10 days, bulls had to either liquidate their position or take delivery.