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Stating that crisis-hit NSEL is “bereft of any credibility”, regulator FMC today said it has recommended the Government to consider merger of the spot commodity exchange with its promoter FTIL for speedy recovery of dues over Rs 5,300 crore from defaulters.
To ensure that FTIL takes responsibility to resolve the payment crisis at National Spot Exchange Ltd (NSEL) at the earliest, Forward Markets Commission (FMC) has also suggested the Government to consider taking over the management of FTIL.
Both Corporate Affairs and Finance Ministries are studying the feasibility of implementing the FMC’s proposals.
“The Commission, vide its letter dated August 18, has recommended to the Ministry of Corporate Affairs to consider the merger/amalgamation of NSEL with FTIL in public interest so that the human and financial resources of FTIL are also directed towards facilitating speedy recovery of dues from the defaulters at NSEL,” FMC said in its latest report.
The recommendation has been given to the Government in view of the depleted resources in terms of manpower and financial strength available at the disposal of NSEL, it said.
Also, “NSEL as a corporate entity has now been rendered bereft of any credibility and now seems financially and physically incapable of effecting any substantial recovery from the defaulting members,” it observed.
The regulator has also recommended the government to consider taking over of the management of FTIL, thereby ensure the company takes full responsibility to resolve the payment crisis at NSEL at the earliest.
Taking over the FTIL management will help manage the affairs of the company in a professional way by bringing in an institutionalised framework as recommended by the Working Group appointed by the government, it added.
NSEL, a subsidiary of the Jignesh Shah-led Financial Technologies India Ltd, has recovered so far a little over Rs 360 crore of dues from defaulters out of the total outstanding amount of Rs 5,689 crore.
Recently, FMC had said that the NSEL has not made much progress in recovery of dues from defaulters, which the spot exchange refuted saying the watchdog has adequate powers to speed up efforts to get back the investor money.
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