He had to first assess, then manage the crisis: Ramesh Abhishek

The first sign of the brewing National Spot Exchange crisis was when the ministry of consumer affairs designated the Forward Markets Commission in February 2012 to get information from NSEL's use of the exemption from one-day forward trades. Without the exemption, the intra-day square-off on the spot exchange would have become forward deals, which is FMC's purview.

Prior to that, there were no agency regulating NSEL. Soon after FMC started getting information from NSEL, it was clear that the exchange was violating norms by short-selling. In July 2013. NSEL was asked to settle all contracts on maturity. which put pressure on exchange to suspend trading.

Ramesh Abhishek, chairman of FMC, had to handle one of the most difficult of crises, which could have also destabilised the financial markets. As the crisis came out, he asked NSEL to disclose everything on which entity had borrowed funds and their dues, to the stock shown in warehouses on the website.

The disclosures made it public knowledge that a mere 24 names had borrowed Rs 5,600 crore and there was almost no physical stock in the warehouses. Here, FMC had to do something that no financial market regulator had done, since an exchange had defaulted, a rare event even globally. He wrote to the government to have a multi-agency probe; later, the enforcement directorate, the department of company affairs and the city police got into the act.

Today, Abhishek is still regularly calling the NSEL board and others to oversee progress in recovering funds from defaulter borrowers and how that is distributed to investors. Around 33,000 NSEL e-series investors have already got back money.