ED panel finds money laundering, Fema violations by NSEL members

The other group, headed by RBI deputy governor, is yet to give its reports

A working group headed by the Enforcement Directorate on Thursday submitted a report to the finance ministry on the crisis-ridden National Spot Exchange Ltd (NSEL).

The report found violation of the Foreign Exchange Management Act and the Prevention of Money Laundering Act by some borrowers on the exchange. Officials said instances of illegal transfer of money between members of NSEL using the exchange platform were also found.

This is one of two working groups that had been constituted within a larger task force to probe developments in NSEL and suggest ways to thwart systemic risks.

The other group, headed by a Reserve Bank of India deputy governor, is yet to give its reports on measures that could be taken to ensure no systemic impact of the NSEL developments.

Officials in the department of consumer affairs said the developments might spread to the Multi Commodity Exchange, as Financial Technologies is a majority holder in both. "Once the two reports come, on decisions which fall under my jurisdictions, I would take those decisions," Finance Minister P Chidambaram had said earlier.

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

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

NSEL is facing the problem of settling dues worth Rs 5,600 crore to 148 members and brokers representing 13,000 investor clients, after it suspended trade on July 31 on government direction.