NSEL seeks legal options against FMC

Asks why regulator has not declared borrowers not "fit and proper"

Crisis-ridden National Spot Exchange Ltd (NSEL) is planning to legal action against the commodities derivatives markets regulator the Forward Markets Commission (FMC) for its alleged biased role in the Rs 5,600 crore payment crisis at NSEL.

"While FMC declared Financial Technologies (FTIL), the promoter of NSEL, and its directors as 'not fit and proper', the regulator has taken no actions against brokers despite having found of several cases of misappropriation. We have apprised with developments of FMC several times which has turned blind eyes. So, this is a clear case of biasness for which we are keeping all options open including legal ones," said Prakash Chaturvedi, Joint Managing Director, NSEL.

Chaturvedi claimed that the High Court Committee (HCC) appointed by the Bombay High Court has received know your clients (KYC) details of only 4500 clients of so called 13,000 claimed so far by brokers and their associations. Despite several requests, some brokers have denied KYC of their clients which has been reported to FMC.

"When the money trail is discovered and all 24 borrowers have been declared defaulters why not they been declared 'not fit and proper'? Why have not been debarred from trade?" asked Chaturvedi.

Meanwhile, NSEL revealed that Ram Naresh Saraf, father of Pankaj Saraf, one of the most vociferous member of traders' associations has received as Rs 54.04 lakh with 10% of haircut to settle his outstanding account with NSEL. The same was not reported to any of the investigative agencies nor NSEL has been asked to deduct the amount from its total outstanding of Rs 4.19 crore.

Interestingly, P D Agroprocessors, one of NSEL's largest defaulters with Rs 687 crore as outstanding has in an affidavit in the Bombay High Court submitted that it has settled account with Ram Naresh Saraf.