With the National Spot Exchange Ltd failing to pay out Rs 174.72 crore to investors as scheduled, the NSEL board sacked its Managing Director and Chief Executive Officer Anjani Sinha and five other top executives.
The Ministry of Consumer Affairs has taken the NSEL default seriously and the matter has been referred to the Prime Minister’s Office (PMO), an official in the Consumer Affairs Ministry said.
The Finance Ministry is likely to be asked to look into the issue as the NSEL imbroglio gets murkier, and jittery investors turn to the Government for a solution. The current thinking in the Ministry of Consumer Affairs is that the Finance Ministry is better equipped to deal with the issue.
“A decision at the higher levels is likely to be taken in this regard in two-three days,” the official said.
Meanwhile, the NSEL board appointed P. R. Ramesh as “Officer on Special Duty” to exercise all powers of a CEO. He will report to the board. Ramesh has over 20 years experience in legal practice and regulations dealing with exchanges and market participants.
While removing the top six executives, including the CFO, from their current assignments, the board said Sinha, however, will be a special officer assisting in the recovery process. The sacked team has also been made responsible for recovery.
By Tuesday afternoon, the NSEL deposited only Rs 92.12 crore in the escrow account as 11 of the 24 entities that owe money did not pay for the first tranche of settlement.
ARK Imports, which owes Rs 719.42 crore, Juggernaut Projects (Rs 220.2 crore), Tavishi Enterprises (Rs 333.01 crore) and Yathuri Associates (Rs 424.64 crore) did not deposit any money, leading to the default. N. K. Proteins had offered to settle its dues of Rs 967.15 crore through sale of commodities, plant and machinery and other fixed assets. The NSEL said it will initiate default proceedings against Lotus Refineries for not cooperating in settling the dues of Rs 252.56 crore.
The Forward Markets Commission has faulted the NSEL for not furnishing party-wise amounts deposited in the escrow account and for not putting up the details on its Web site.
The regulator said that NSEL had provided different information on different occasions. On August 14, the exchange had said it had to receive Rs 5,574.35 crore on one page while on another page the reconciled amount was Rs 5,589.41 crore. It was revised to Rs 5,557.82 crore and the reconciliation statement, submitted on August 19, showed Rs 5,572.74 crore. “This casts serious doubt on the reliability of the figures submitted by NSEL and also raises doubt on the seriousness of the management and Board of the NSEL regarding settlement of the outstanding obligations,” the regulator said.
Stating that the Government was serious about resolving the issue, officials said the Finance Ministry, the Consumer Affairs Ministry and the FMC were seriously examining the payment defaults.
“Finally, whosoever has violated the norms will be put to task and nobody will be allowed to escape. Also, all actions of similar exchanges will be reviewed by appropriate authorities at appropriate time. The entire mechanism is likely to be reviewed,” the official added.