No systemic danger due to NSEL crisis: Arvind Mayaram panel - Times of India

The author has posted comments on this articleTNN | Sep 27, 2013, 06.22AM IST

NEW DELHI: The Arvind Mayaram panel has said that there is no systemic danger from the failure of the National Spot Exchange (NSEL) and there is no danger of it spilling over to other markets, finance minister P Chidambaram said on Thursday. But, Chidambaram said he had asked both Securities and Exchange Board of India (Sebi) and Forward Markets Commission (FMC) to keep a close watch on the situation.

NSEL is grappling with a payment settlement crisis of over Rs 5,600 crore and several investigative wings of the gov ernment are examining the case, which hit the headlines. The finance minister also said various authorities were examining the report and they are expected to take action as early as possible. He said the Mayaram panel had suggested that different authorities must take action. "Action has to be taken by different authorities. Let me tell you who are examining the report. The FMC regulator is examining the report and action to be taken under the FMC Act. The ministry of corporate affairs is examining the report in the light of the provisions of the Companies Act, the old Act and now the new Act," Chidambaram told reporters when asked why there was a delay in taking action against the company.

"A complaint has been received by the CBI for violations of the Indian Penal Code and some other laws. Now, the CBI is looking into that complaint and they will decide what further action should taken on the complaint," The finance minister said. Chidambaram also rejected the compa rison of the NSEL failure with that of Satyam, which went bust due to alleged accounting fraud. "If you go into facts of NSEL you will find that this has nothing to do with Satyam. NSEL is a company. It is not a recognized association under the FMC Act. It did not have any business but it got an exemption even before it started the business," the minister said.

"The exemption exempted it subject to conditions. On day one, condition one was violated, on day one, condition two was violated yet it carried on business. Since it is not a regulated entity, there was no regulator asking questions. I think there is much more to the way NSEL started business than meets the eye." Chidambaram said people seemed to have given money to the NSEL with open eyes despite the fact that it was not a regulated entity, that it was violating the condition even from first day.

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