The controversy errupted two months ago when NSE received US-64 units from some members as their deposit towards the base minimum capital. A member's trading limits are determined by the extent of the base capital that he deposits with the exchange, in the form of cash and securities. The shares are kept with the HDFC Bank and are transferred in the names of the NSE's clearing corporation and the bank. However, when NSE and HDFC Bank lodged the units for transfer with UTI, the plea was rejected.

The matter was subsequently taken up with the official concerned who refused to relent. NSEsources said the exchange had pointed out to the official that there was no reason for the UTI to oppose the transfer as this was a matter between the exchange and the brokers. ``They, however, failed to see reason and subsequently we were forced to issue a notice to the members saying that we would not be able to accept US-64 units as contribution to the base minimum capital,'' said a top NSE source.

UTI, however, did a volte face following NSE's decision and has decided to transfer the units in the name of the clearing corporation and the bank. NSE managing director R H Patil said that the matter had been resolved with UTI agreeing to transfer the shares. ``There were problems with the trust deciding not to transfer the shares. We were left with no option but to keep the units out of the list of securities which can be deposited. They have, however, agreed now,'' he said.

NSE members are allowed to take a gross exposure only to the extent of seven times their base minimum capital. In order to raisetheir exposure, they required to correspondingly enhance their base minimum capital. The reason for UTI to scuttle the procedural move could not be ascertained, as UTI chairman, P S Subramanyam was not available for comment.