Multi-agency panel to probe NSEL mess

However, govt still undecided on next steps, with continuing doubts over jurisdiction; FMC promises to ensure smooth claims settlement

A task force is to probe the payment crisis at the National Spot Exchnage Ltd (NSEL), with representations from different wings of the government. This has been decided even as brokers' demands for a multi-agency probe is getting louder and various government departments pass the buck on which will probe the Rs 5,600-crore payment mess.

Friday was the first day of settlement of dues in phases. An NSEL spokesperson said it was successful and payout to investors would be done on Tuesday. However, the NSEL Investors Forum, whose representatives will meet Finance Secretary R S Gujral and Consumer Affairs Secretary Pankaj Agarwal on Monday, was sceptical. A calling attention motion is expected to be taken up in Parliament on Tuesday on the subject.

As the issue of regulatory gaps surfaced, the Warehouse Development and Regulatory Authority also demanded it be entrusted with the task of regulating spot exchanges.

A task force to look into the crisis was a suggestion of the Prime Minister's Office to the finance ministry. However, a finance ministry official said, "Legal authority doesn't rest with us. It is with the consumer affairs ministry." He said the task force could only give recommendations. Another official said the finance ministry had no jurisdiction over NSEL.

When asked, Economic Affairs Secretary Arvind Mayaram said the finance ministry had not looked into the issue yet. He said the department of economic affairs would lead the task force but its terms of reference had to be worked out. The said task force is to comprise the secretaries of the department of consumer Affairs and the ministry of corporate affairs, officials said. It would also have people from the Reserve Bank of India, the Securities and Exchange Board of India (Sebi), the directorate of revenue intelligence and the enforcement directorate. In another development, Minister of State for Telecom and Shipping Milind Deora wrote to Prime Minister Manmohan Singh and sought his intervention.

The payment crisis came to the fore after the exchange suspended trading in all futures contracts, following objections from the government. Subse-quently, there were allegations that the exchange had in violation of law allowed trading in forward contracts and pre-sold commodities without having adequate stocks. Later, a group of investors alleged the exchange did not have adequate stocks in its warehouses and would default in payments. The brokers also demanded a multi-agency probe into the issue.

Reverberations of the crisis would be heard in Parliament on Tuesday when a calling attention motion is expected to be taken up, Consumer Affairs Minister K V Thomas said. However, there will be no voting on the motion.

In the overall falling market, the share price of Financial Technologies, promoter of NSEL, went up three per cent to close at Rs 151 on the BSE after opening 15 per cent lower in the morning trade. Intra-day shares went up 20 per cent to touch Rs 178. The Multi Commodity Exchange share closed four per cent lower.

Meanwhile, FMC , the authority overseeing payment of investors' dues at NSEL, assured investors of active steps to ensure smooth settlement. FMC has asked NSEL to shorten the settlement. It has also asked it not to make payment to India Bullion Markets Association (IBMA), a company floated by NSEL. IBMA is a clearing company which was doing the clearing process of all transactions by members. Since it is an associate company, FMC said the payment to investors would not be through that company but through an escrow account. FMC has asked NSEL for details on payment in and out of IBMA from July 15.