NSEL task force reviews actions against exchange

Task force takes stock of investigations being carried out by two working groups, progress made so far

The first meeting of the high-powered task force constituted by the government under the chairmanship of economic affairs secretary Arvind Mayaram on the crisis surrounding the National Spot Exchange Ltd (NSEL) today deliberated on the various actions being taken against the exchange for violation of law and also the progress made so far in the investigations.

Officials said proposals like taking action against the Exchange under the Prevention of Money Laundering Act (PMLA) and other provisions of the Law were also discussed in the meeting. Official said the task force also took stock of the investigations being carried out by the two working groups and the progress made so far.

“The finance ministry can take action only under the Prevention of Money Laundering Act (PMLA), but for this to happen it needs to be proved that proceeds from crime have been used and the transactions are layered,” a senior government official said.

He said the task force is looking into matter and so also the two sub groups constituted for this purpose, which is expected to submit their reports to the Department of Economic Affairs by September 12.  

"The two groups will submit their reports by September 12," DEA Secretary Arvind Mayaram told reporters here after a meeting that was held to discuss the crisis. Officials said the task force will again meet on September 16 to discuss the content of the two reports.

“If violation of laws and regulations by NSEL is established an action will be taken against the company,” a senior official said. He said that if the state government wants it can arrest any official of NSEL if sufficient charges are proved.

The meeting was also attended by RBI Deputy Governor K C Chakrabarty, Revenue Secretary Sumit Bose as well as officials from Enforcement Directorate (ED), Consumers Affairs Ministry and Corporate Affairs Ministry.  

Officials said more clarity on the kind of action to be taken against NSEL can only be had once the finance ministry gets powers spot exchanges after the commodities market regulator FMC comes under its ambit.

“The file to this effect is pending with the PMO. An executive order may be issued soon,” the official said.

The National Spot Exchange Ltd, promoted by Jignesh Shah- led Financial Technologies (India) Ltd, is facing the problem of settling Rs 5,600 crore dues to 148 members/brokers, representing 13,000 investor clients, after it suspended trade on July 31 on the government direction.  

The Prime Minister's Office (PMO) had last month suggested setting up of a special team led by DEA.  The team is supported by the two working groups headed by Director, Enforcement Directorate (ED) and Deputy Governor RBI, that are preparing the reports.