Govt appoints two groups to probe NSEL crisis

The two working groups will fall under the overall supervision of a task force under economic affairs secretary Arvind Mayaram

Two working groups have been constituted within a larger task force to probe developments in the crisis-ridden National Spot Exchange Ltd (NSEL) and suggest ways to thwart any systemic risks.

They have been asked to give their reports within a fortnight from their constitution on Monday. “Once the two reports come, on decisions which fall under my jurisdictions, I will take those decisions," Finance Minister P Chidambaram told a press conference.

The two groups will come under the overall supervision of a task force under economic affairs secretary Arvind Mayaram.

One of the two will examine if there were violations of any laws or regulations by NSEL or associated companies. This group will be headed by the enforcement directorate chairman and will have representatives of the directorate of revenue intelligence, Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), department of consumer affairs (DCA), Forward Markets Commission (FMC), Serious Fraud Investigation Office and Central Board of Direct Taxes.

The other group will suggest measures that could be taken to ensure  no systemic impact of the NSEL developments.

This will be headed by an RBI deputy governor and comprises the FMC chairman, a Sebi member and adviser to the Financial Stability and Development Council.

Officials in DCA said the developments in NSEL might spread to the Multi Commodity Exchange, as Financial Technologies is a majority holder in both.  

Said Chidambaram: "There are rapidly unfolding developments; we are keeping a careful watch. We are in constant touch with Sebi and FMC. We will deal with the situation as it develops. We will take the decisions required to be taken.

Chidambaram Error! Reference source not found.clarified that FMC did not come under his ministry. "NSEL is under the FMC and the administrative ministry of FMC is consumer affairs. There is some discussion about where FMC should be located. That decision I cannot take." There was a proposal to shift FMC to the finance ministry.

The government had appointed two working groups since the developments in NSEL have wider ramifications, said Chidambaram.