The Government has told the National Spot Exchange Ltd (NSEL) to fulfil

The Government has told the National Spot Exchange Ltd (NSEL) to fulfil its role as a guarantor and meet its commitments to investors.

Ahead of the first payout day on Tuesday, the Government said the exchange has been asked to declare the list of defaulters, if any, and spell out the action taken under its bye-laws.

Tuesday is the first payout day as per the seven-month plan announced by the NSEL last week to settle Rs 5,600 crore of investor dues. The NSEL has to make payments tomorrow to investors such as the Indian Bullion Market Association, MMTC Ltd and PEC Ltd. Friday, August 16, was the first day of pay-in by the members (for unsettled positions) to the exchange.

“Friday was the first day of payment and there might have been defaulters. We have asked the NSEL to declare the list of defaulters, if any, and disclose action taken against them as per their own bye-laws,” Consumers Affairs Secretary Pankaj Agarwala said.

Further, he said the Government was thinking of getting the NSEL stocks lying in warehouses audited by Government agencies.

Sources said the state-run Central Warehousing Corporation may be asked by the Government to inspect NSEL’s warehouses as investors suspect deficiencies in the quantum of underlying physical stocks in those warehouses.

The NSEL issue also rocked Parliament with BJP leader Prakash Javadekar raising the issue in the Rajya Sabha. “The way the NSEL is being run is an example of another scam under the UPA,” he said.

Javadekar added the NSEL scam is likely to become as big as the 1991 and 2001 stock market scams.

“One Central Minister is involved in this scam,” he alleged. In a letter to the NSEL on August 16, the Consumer Affairs Ministry had told the exchange to take its role of a guarantor seriously.

“NSEL, being a guarantor, has been told to behave like a guarantor and the exchange must meet commitments,” Consumers Affairs Secretary Agarwala said.

He was speaking to reporters after a section of investors made a representation to the Government on Monday.

Anxious investors hit by the payment crisis at NSEL are keenly awaiting the first payout by the exchange on Tuesday.

There are about 13,000 investors including 7,000 small investors whose Rs 5,600 crore is stuck with the NSEL.

Investors’ demands

Representatives of investors also met Consumers Affairs Minister K. V. Thomas, urging him to direct the Forward Markets Commission (FMC) to take a tough stance and speed up efforts to resolve this issue.

“The FMC should take a tough stance and we have urged the Minister in this regard,” said S. K. Saraf, Chairman of NSEL Investors Forum.

Investors also demanded that NSEL be merged with Financial Technologies India Ltd, the promoter company, which is financially stronger, he said.

The investors are curious to know about the steps being taken by the FMC in resolving the NSEL imbroglio.

“Ever since the FMC has been asked to look into the NSEL issue, there has been no information in the public domain from the regulator. We want to understand the steps being taken to solve the issue,” an investor said.

(This article was published on August 19, 2013)
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