Commodity markets regulator FMC has asked crisis ridden NSEL to go ahead for the time being with its plan to settle Rs 5,600 crore of dues to investors and questioned the credibility of the accounts and information provided by the exchange.
On August 14, the National Spot Exchange (NSEL) had submitted the plan to the Forward Markets Commission (FMC) to clear dues to 13,000 investors over a period of seven months.
Noting that the NSEL’s settlement plan does not inspire confidence, the FMC asked the exchange “to go ahead with settlement plan for time being as the payouts are already seriously delayed, which is causing deep anxiety and resentment among the sellers.”
The FMC came down heavily on the NSEL for not taking guarantees for the financial settlement and providing different sets of information at different times.
“The credibility of information given and the books of account/records maintained by NSEL have raised serious doubt on its authenticity. You (NSEL) are therefore directed to appoint a forensic auditor firm to establish the credibility of books of account, record maintenance by the exchange in next seven days,” the regulator said in a letter to the NSEL.
The FMC directed the exchange to appoint the auditor with its consent.
The NSEL has also been asked to update the amount deposited in the escrow account on a daily basis to the regulator and on its official website.
While the exchange is required to guarantee the settlement of all financial obligations, the NSEL mentioned in its settlement plan that the dues would be cleared subject to realisation of funds from payers.
To this, the FMC said, “As such, the exchange appeared to have disowned its responsibility of guaranteeing the financial settlement. Whereas the exchange has the sole responsibility of settlement of trade on the exchange...It cannot simply depend upon the realisation of pay-in obligation from buyers.”
The NSEL, promoted by Jignesh Shah-headed Financial Technologies India Ltd (FTIL), was engulfed in a crisis after its suspended trade on July 31, raising concerns about possible default of Rs 5,600 crore due to investors, including 7,000 small investors.