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New Delhi, Aug 27:  

With the National Spot Exchange Ltd (NSEL) crisis getting bigger and bigger every day, Finance Minister P. Chidambaram has announced that action in this matter will be taken on the basis of the recommendations by the two committees.

One of these two committees is headed by the Director of Enforcement Directorate, while the other is by a senior Finance Ministry official. Both the committees are looking into possible violation and will suggest action. These committees are likely to submit their report by September 5-7.

"Once the two reports come, whatsoever will be under my jurisdiction, I will take action. But the Government will take action on the report of the two committees," Chidambaram said for the first time on NSEL crisis.

He also mentioned that since there are rapidly unfolding developments, "We are keeping a careful watch. We are in touch with SEBI (Securities and Exchange Board of India-the capital market regulator). We are dealing with the situation. And action that is required will be taken."

Settlement dues

NSEL is facing the problem of settling Rs 5,600-crore dues to 148 members/brokers, representing 13,000 investor clients after it suspended trade on July 31, following the government direction in the wake of violation of certain rules by the exchange.

Even the settlement plan has not worked well till now and there is apprehension of default in the second payout scheduled for Tuesday. Earlier, it had no regulator. But after the crisis broke out, the Consumer Affairs Ministry empowered FMC to look into the matter and take appropriate decision which will be binding.

The Prime Minister Office asked the Finance Ministry to form a taskforce to see whether any violation has taken place or not. Accordingly, two committees were formed. Then, the Income Tax Department raided various premises of defaulters. Now ED is also getting ready to initiate probe into the matter.

Complaints against defaulters

On Monday, NSEL lodged complaints against five defaulters, including NK Proteins, with the Economic Offences Wing of Mumbai Police as they have failed to meet FMC norms on having adequate stocks in warehouses.

The other defaulters are Ark Imports Pvt Ltd, Lotus Refineries Pvt Ltd, Vimladevi Agrotech Ltd and Yathuri Associates.

FMC had also ordered NSEL to ask the defaulters to handover the books, documents, papers, assets, cheque books and other documents, and the same should vest with the exchange for the benefit of creditors.

Shishir.Sinha@thehindu.co.in

(This article was published on August 27, 2013)