'NSEL unregulated entity, violated norms from day 1' - Economic Times

NEW DELHI: The government has said the Central Bureau of Investigation (CBI), the ministry of corporate affairs and Forwards Markets Commission will soon take action against the National Spot Exchange Ltd (NSEL), flagging it as an unregulated entity and violated norms from the first day of beginning business.

"The Mayaram panel report has suggested that CBI, FMC and MCA must take appropriate action. They have listed out the irregularities. These authorities are looking into the matter. They will take action," finance minister P Chidambaram told reporters on Thursday.

A panel headed by economic affairs secretary Arvind Mayaram had been tasked to look into alleged irregularities in the functioning of NSEL, which is grappling with a Rs 5,600-crore payment crisis.

Chidambaram said the CBI is looking into the complain it had received against NSEL for violations of various sections of Indian Penal Code.

"I cannot possibility give a time limit of each of these authorities will take action. But what I have gathered each of these agencies will take action as early as possible," he said.

A senior CBI official said the agency had received the complaint and is looking if it has jurisdiction on the issue.

Chidambaram said NSEL flouted rules from the very beginning and hinted there was something amiss in the way it started business.

"NSEL is a company. It is not a recognised association under the FMC Act. It is not a registered association under the FMC Act.

It did not have any business but it got an exemption even before it started the business... Day one, condition one was violated. On day one condition two was violated. Yet it carried on business," finance minister said.

"Since it was not a regulated entity there was no regulator to ask it questions. So, I think there is much more to the way NSEL started business than what meets the eye," Chidambaram added.

A government notification exempted NSEL from 2007 from any FMC regulation for forward contracts of one day duration.

Asked about thinking in the government for a change in management of the other entities floated by the same promoter group including the commodity exchange MCX and stock exchange MCX-SX, he said: "Let us wait for the report of the regulators. Let FMC give its report. I think the FMC report will be ready in a day or two. We will see the report first."

He said people seem to have given money to NSEL promoters with open eyes despite knowing it was an unregulated entity and some of them had lost money now.

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