CBI probing NSEL irregularities: FM

Says NSEL, Satyam scam not similar

Finance Minister P Chidambaram on Thursday said that the Central Bureau of Investigation is investigating a complaint received on Indian Penal Code violations by the company.

Chidambaram said the Corporate Affairs Ministry and the Forward Markets Commission will now examine the report and give their views following which action would be taken.

However, he ruled out any similarity between National Spot Exchange Ltd crisis and irregularities in Satyam Computers and also brushed aside worries about NSEL issue leading to a systemic problem in Indian financial markets.

 He said NSEL was neither a company nor a registered association but was given exemption from regulations. "From day one, it flouted conditions even before starting the business,” Chidambaram said at a press briefing here, adding many investors had put their money into the exchange knowing well that it was an unregulated and non-registered entity. 

"People seem to have given money to the NSEL's promoters with open eyes, where it is not a regulated entity that it was violating conditions even from day one, yet they were giving money to NSEL," the finance minister said. 

National Spot Exchange, promoted by Financial Technologies (India) Ltd, suspended trade in contracts from July 31 after a payments crisis led to a government order barring trade. Thereafter, the government initiated an investigation into the payment defaults. 

Last month, the government had appointed a special committee headed by Economic Affairs Secretary Arvind Mayaram to examine the payment default crisis at the exchange, which was submitted to Chidambaram earlier this week.  

On contents of the report, Chidambaram said irregularities were found in the payments by the exchange.

"It (National Spot) is not a registered association under the FMC Act...but it got an exemption even before it started the business. The exemption exempted it subject to conditions. On day one, condition one was violated, on day one, condition two was violated. Yet it carried on business. Since it's not a regulated entity, there was no regulator to ask it questions."

He, however, said the NSEL issue is unlikely to lead to a systemic problem in Indian financial markets.
   

"There is no systemic danger, there is no danger of spilling over to any other markets, that's a categorical finding of the Mayaram committee report.

But I have asked both Sebi (Securities and Exchange Board of India) and FMC to keep a careful watch," the finance minister said.