Govt irked over NSE's repeated extensions to cut stake in NCDEX

The consumer affairs ministry will consult commodity market regulator FMC before taking a decision on NSE’s repeated request for extension to dilute its stake in commodity bourse NCDEX to five per cent.

“The NSE has sought extension for the third time. This is too much. However, we will take a decision on whether to give a final extension or not only after taking the views of the FMC,” a senior Consumer Affairs Ministry official told PTI.

By December 2010, the National Stock Exchange (NSE) had to bring down its stake from the existing 11.1 per cent to five per cent in NCDEX to comply with new norms of the Forward Markets Commission (FMC).

The stock exchange, however, could not dilute its stake and sought extent ion twice till June 30 this year.

Last week, the NSE again approached the Ministry for a three-month extension.

Sources said that NSE has already signed the term sheet to sell 6.1 per cent of stake in NCDEX to meet the revised FMC guidelines and has sought extension of three months to complete the formalities.

The deal for share sale would need approvals from the government’s FDI clearance body Foreign Investment Promotion Board (FIPB), Reserve Bank of India (RBI) and FMC.

The consumer affairs ministry frames policy for commodity futures market and the regulator FMC oversees the functioning of the 23 commodity exchanges in the country.

Earlier this year, NCDEX had roped in Jaypee Capital Services and Shree Renuka Sugars to enhance their net worth to Rs 50 crore as required by the new norms.

Jaypee Capital holds 22.38 per cent stake in NCDEX while Shree Renuka Sugars has 12.50 per cent stake in the country’s second largest commodity bourse. LIC, IFFCO and NABARD are among other major shareholders in the exchange.