Finance ministry officials have worked out a detailed presentation on the National Spot Exchange Limited (NSEL) crisis for finance minister Arun Jaitley. The presentation is important as the minister has to take some key decisions, including the issue of merger of regulators for the sector in June itself, before the Union Budget is finalised.
He is also expected to face a lot of questions from MPs on this subject once the two Houses get down to business in the Monsoon Session.
The Rs 5,500-crore crisis at the NSEL which broke out in August 2013, has thrown up the gaps in the regulatory structure for commodity markets. An examination of those will be necessary for Jaitley to decide whether to move on a quick merger of the commodity market regulator, the Forward Markets Commission (FMC), with the Securities and Exchange Board of India.
The alternative is to let the two regulators continue their independent ways for now.
The ministry has, for instance, in April advertised for the post of chairman of the FMC that falls due in July. The minister needs to take a call on this, too. The crisis at the NSEL has led to the arrest of Jignesh Shah, founder chairman of Financial Technologies India Ltd (FTIL), the promoter company of NSEL, among others.
The government has besides, already overhauled the board of Multi Commodity Exchange of India Ltd (MCX) (the commodity exchange) and MCX-SX (the stock exchange) independent of FTIL. Shah’s company had promoted both of them.
A source close to the development said they hope to brief the finance minister on the entire thread of the NSEL payment crisis. This will also be the first time that a finance minister will be fielding questions from legislators on commodity markets, as the shift of FMC and consequently that of NSEL happened on to the finance ministry turf only last year from the department of consumer affairs. Questions about repayment of investor’s money will come up now. Jaitley will field questions on both how the finance ministry and the ministry of corporate affairs respond to the developments.
Till now, based on an interim inspection report from audit firm PricewaterhouseCoopers, the consumer affairs department has concluded that the parent FTIL purposely faulted on conducting prudent and sound business of its subsidiaries — NSEL and MCX.
The department was even pursuing legal provisions to take control of