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Wednesday, 21 March, 2001, 10:09 GMT
Calcutta Stock Exchange crisis talks
The Bombay Stock Exchange
Stocks on the Bombay exchange slide almost 10%
The Calcutta Stock Exchange has spent most of Wednesday debating how to resolve its recent payments crisis.

The exchange's board of directors has been in a meeting all day with president Kamal Parekh.

A planned announcement by the exchange at 1030 GMT has been postponed until 1400 GMT.

The payments crisis was sparked earlier this month when several broker members of the exchange defaulted on their trades.

Speculation surrounding the defaults has damaged investor confidence and sent stocks plunging almost 10% in the last 11 trading days.

Taking action

On Tuesday, the exchange said it had launched default proceedings against three brokers, representing 10 firms.

Mr Parekh told journalists that the three brokers owe the exchange 450m rupees (6.7m; $9.6m).

Calcutta's exchange has damaged investor confidence
During an earlier meeting with the exchange's members on Monday, Mr Parekh warned that strict action would be taken against defaulting brokers.

The exchange's settlement guarantee fund - an emergency pool of money - has covered 130m rupees of the shortfall.

"The balance (has come) out of the exchange's margin funds against dishonoured cheques of 320m rupees received from these parties," said Mr Parekh.

Exchanges charge their members margin on trades to cover risks, such as possible defaults.

Boosting confidence

In a bid to boost confidence, Mr Parekh stressed that the exchange had enough resources to avert any future crisis.

He added there would be no delay in the due settlement of trades on Friday.

The Bombay Stock Exchange's 30-issue Sensitive index fell 1.35% on Tuesday.

The Bombay exchange is undergoing its own scandal which has led to the suspension of some directors amid allegations of insider trading.

Political troubles

A political crisis has also depressed the stock markets.

Opposition parties forced the adjournment of parliament again on Tuesday because of an arms bribery scandal.

They have also called for the resignation of India's coalition government.

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See also:

13 Mar 01 | Business
Scandal rattles India's investors
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Bombay stock exchange chief quits
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Bombay market losses probed
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