Lack of proper supervision at the troubled NSEL's accredited godowns led to irregularities and the Rs 5,600 crore payment crisis at the bourse, Food Minister K V Thomas said today.
"We have burnt our hands in the NSEL case...None of the warehouses accredited with NSEL was registered with the WDRA and were not properly regulated," Thomas said here.
"You are aware that large-scale irregularities have been reported in the operations of the NSEL," Thomas said at a foundation day function of the Warehousing Development Regulatory Authority (WDRA).
Jignesh Shah-led National Spot Exchange Ltd (NSEL) is facing problems settling Rs 5,600 crore of dues to 13,000 investors after the bourse suspended trading in some contracts in July on directions from the government. Three former NSEL officials have been arrested by the Mumbai Police.
Thomas said the Forward Markets Commission (FMC), the commodity markets regulator, has been instructed to make it mandatory for all warehouses accredited with spot and futures exchanges to get registered with the WDRA.
The FMC issued an order in this regard on August 30, the minister said, and hoped that "future and spot exchanges will not be indulging in irregularities if all warehouses are maintained as per WDRA specifications."
As per norms, spot exchanges should ensure that physical stocks of commodities are deposited at its accredited warehouses before allowing traders to sell them on the bourse so that there is no default on delivery.
A senior official of the Economic Offences Wing of the Mumbai police said this month it raided 60 warehouses attached with the NSEL and found half of them empty.
Thomas said: "Increased investment by the private sector in warehousing/cold storage, particularly in rural areas, can provide physical infrastructure and modern technology, thereby increasing the efficiency in the handling, storage and transportation of agri-commodities."
Food Secretary Sudhir Kumar emphasised the need to strengthen warehousing operations in the country.
"In the NSEL case, godowns were not registered. We should not face a similar situation. Accreditation and registration of warehousing system needs to be strengthened to avoid NSEL kind of situation," he said.
The system of warehousing registration, testing and accreditation should be efficient and enthuse confidence in the economy, he added.
WDRA Chairman Dinesh Rai said: "There is a need to have a robust system of inspection and accreditation system."
WDRA, which was set up in 2010, is functioning with limited staff and vacant posts have not been filled.