As crisis at National Spot Exchange continues to deepen, the Corporate Affairs Ministry has also begun looking into the matter to ascertain whether there have been any violations of the Companies Act.
“We have received a reference on NSEl issue from the Consumer Affairs Ministry. We are looking into it,” a Corporate Affairs Ministry source told the news agency. Among others, the Consumer Affairs Ministry, Forward Markets Commission, Finance Ministry and Securities and Exchange Board of India (Sebi) are already looking into various aspects of the NSEl crisis.
The Corporate Affairs Ministry may look into issues like possible violations of various provisions of Companies Act including those related to the promoters and top management, sources said, without divulging further details. The beleaguered exchange, which was set up to provide an electronic platform for buying and selling agriculture and other commodities, was found to be providing trading in forward commodity contracts as well in violation of rules.
It is engulfed in a crisis after it suspended trade on July 31 following Government directives. This triggered a payment crisis of Rs 5,600 crore. The exchange could manage to pay just over half of Rs 175 crore first tranche of payment due to investors yesterday, a day that also saw sacking of its top management brass including Managing Director and CEO Anjani Sinha.
NSEl has presented a seven-month plan to settle the dues, which is being overseen by commodities markets regulator FMC (Forward Markets Commission) and the Consumer Affairs Ministry. The bourse has already drawn flak from the FMC, which has questioned the bourse’s credibility and reputation for non-settlement of outstanding trade. The regulator had also said the exchange furnished “insufficient and delayed information” that is neither accurate nor reliable. NSEl was asked to cease operations by the Government, after violations of various regulations came to fore recently.
FTIl down over 8%
Shares of Financial Technologies (India) ltd (FTIl) ended over 8 per cent down after its subsidiary National Spot Exchange failed to meet the first tranche of payments to investors on Tuesday. The scrip had fallen as much as 20 per cent to the day’s low of Rs 113.05 on the BSE and recovered some lost ground to close at Rs 129.75, down 8.17 per cent.
The benchmark S&P BSE Sensex crashed another 340 points today to the lowest closing level in more than 11 months as the rupee continued its free fall to an all-time low. On Tuesday, the National Spot Exchange (NSEl) had sacked its entire top management, including CEO Anjani Sinha, as the beleaguered bourse could manage to pay just over half of the first tranche payment of about Rs 175 crore to investors.
NSEl, promoted by Jignesh Shah-led Financial Technologies, has been barred from offering trade in any commodity following irregularities. It also sacked CFO Shashidhar Kotian and five others with immediate effect. The Forward Markets Commission (FMC), the commodities regulator that is overseeing the settlement, wrote to the NSEl board, saying the default in the first tranche payment casts “serious doubts” on the credibility of the exchange.