FMC Censures NSEL for Misleading Public on Dues Recovery

New Delhi: Commodity markets regulator FMC has pulled up the scam-hit NSEL for making "deliberate" efforts to mislead public about progress made in the recovery of over Rs 5,689 crore dues from defaulters.

Taking strong objection to the NSEL's press release issued on September 11 on recovery issue, Forward Markets Commission has said that certain portions in the statement were "replete with factual inaccuracies thereby presenting before the public misleading and specious information".

In its statement, National Spot Exchange Ltd had refuted FMC' observation that the bourse has so far made slow progress in recovery of dues from the defaulters.

Reprimanding the NSEL, FMC said: "The commission is of the view that the content of your press release is laden with misinformation and malicious content with deliberate attempt to mislead the public about the actual state of affairs at NSEL."

In the letter written yesterday to the NSEL, the regulator directed it to "desist from such actions" and asked it to focus on the primary task of recovery of dues from 24 defaulters.

Pointing out that only Rs 360.75 crore has been recovered out of the total outstanding amount of Rs 5,689 crore, FMC said: "NSEL may consider their efforts to be satisfactory but the commission and the affected market participants are extremely concerned at this dismal progress in more than a year."

The regulator also made it clear that its mandate is to supervise the settlement of dues and "not to act as its (NSEL) representing agency to take recovery measures against the defaulting members," as suggested by the NSEL in its September 11 press release.

FMC also pulled up the NSEL for making false claim on availability of sufficient staff to help in recovery process.

"...the claim made in your press release regarding adequate staff strength and expert human resource are contrary to your oft-repeated position before the Commission on the issue," FMC said in the letter.

FMC said that the NSEL has only 54 staff as on July this year, as against 298 personnel in the same month last year.

The regulator said it has written to the Corporate Affairs Ministry to merge NSEL with its promoter Financial Technologies India Ltd because of reduced staff strength, shortage of financial resources and other infrastructure support at NSEL disposal.

NSEL, which is a subsidiary of Jignesh Shah-led FTIL, is grappling with a payment crisis after it suspended trading activities in July last year following a government directive.