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SEBI was Told About FT Danger in 2007, NSEL Investors Being Probed Too


The Finance Ministry had noted, in 2007, that Financial Technologies, the owner of the defaulted NSEL, was potential not fit-and-proper for running a stock exchange, after Income Tax raids found unexplained amounts of Rs. 105 cr. This was disclosed to SEBI! Kudos to N. Sundaresha Subramanian for finding this.

In all this drama, two of the “borrowers” – Topworth steels and Sankhya Investments – have paid up more than the amount they have needed to. The exchange paid out 28 cr. on 15 Oct, and has one more payment coming up today. Even then the total payout has been less than 5% of the total default to date.

And then, the tax department is serious about pursuing investors who put money into NSEL. They want information about the way investors had shown investments in their books, and details of the contracts traded. This will unearth some “unaccounted” money, which might be profits that were not disclosed because, let’s face it, many people just don’t.

The NSEL crisis is now slowing in terms of newsworthiness, but remains a huge blot on the face of exchange management in India. At this point, we are running on steam – a liquidity high propelled by high inflation and a sense of “nothing can happen to us”. But when this clears up – when the tide recedes – it will be the strength of our institutions that brings people to us, nothing else. And that strength is absent when it has come to NSEL.


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