In the aftermath of Financial Technologies India ltd (FTIl) Chief Jignesh Shah's arrest on Wednesday, the company's board has called a meeting on Thursday to discuss the future course of action, even as it expressed shock over the development.
"I am really shocked at Shah's arrest. The board meeting has been called tomorrow to take stock of the situation and decide about the future course of action," FTIl director and former MCX chairman Venkat Chary said.
FTIl Chairman and Group CEO Shah was arrested by the economic offences wing of the Mumbai police for his alleged involvement in the Rs 5,600-crore payment crisis at group company National Spot Exchange (NSEl). Shah's FTIl owns NSEl, a spot commodities exchange that is under investigation by the police and regulators after it struggled to settle outstanding contracts worth Rs 5,600 crore.
NSEl's payment troubles began after it was ordered by the government in July last year to suspend spot trade in most of its contracts due to suspected violations.The exchange could not settle the outstanding trades, sparking investigations by the police and regulators. FTIl blamed NSEl executives and the trading parties for the default.
FTIl has been declared unfit by the Forward Markets Commission to run an exchange and ordered to pare its stake in Multi Commodity Exchange of India to 2 per cent from 26 per cent currently.Meanwhile according to agency reports, the NSEl Investors Forum expressed hope that Shah's arrest will help in early recovery of funds. "Shah's arrest was long overdue. His arrest will scare defaulters and force them to pay the money at the earliest," Forum Secretary Arun Dalmia said.
FTIl has moved the Securities Appellate Tribunal challenging Sebi's ruling that the company was not fit to have stake in any stock exchange. When asked whether FTIl has challenged Sebi order on 'fit and proper' status at the tribunal, a company spokesperson said: "Yes, we have filed it and we have no further comments."