Govt agencies didn’t act against NSEL Finmin, Consumer Affairs Min Had Informed Parliament About Probes In Dec 2012

New Delhi: The National Spot Exchange (NSEL) fiasco, which has led to a delay in the settlement of payment worth over Rs 5,500 crore, is turning out to be a multi-agency failure with even the finance ministry and the Reserve Bank of India (RBI), apart from the ministry of consumer affairs, failing to act against alleged irregularities.      In fact, both the finance and consumer affairs ministries had told Parliament last December that they were probing the issue.      In December 2012, Trinamool Congress's Rajya Sabha member Sukhendu Sekhar Roy had raised the issue of contravention of Forward Contracts (Regulation) Act or FCRA and also asked the government if there were "illegal NBFC (nonbanking finance company) transactions. In identical replies on December 3 and 6, junior minister for finance Namo Narain Meena and the consumer affairs ministry had said: "After analyzing the trading data submitted by NSEL, Forward Markets Commission (FMC)… had intimated the department regarding the non-compliance of certain stipulated conditions… for one-day duration forward contracts. FMC has found that the exchange allows trading on the exchange platform without verifying whether the seller has the stocks with him or not, thus in effect, allowing short sale by the members. FMC has also found that thecontracts traded on the exchange platform for which settlement period exceed 11 days are Non-Transferable Specific Delivery (NTSD) contracts, which is in violation of the provisions of FCRA."      On the issue of NFBCs, both ministers had said "the issue is being examined by FMC in consultation with the ministry of finance".      Between the two questions by Roy, consumer affairs minister K V Thomas told his party colleague Sai Prathap Annayyagari in the Lok Sabha on December 4 that NSEL's reply to a show-cause issued by his ministry and a compliance report were "under examination". On August 5, TOI had highlighted how the consumer affairs ministry slept over FMC's report.      Both the ministries are yet to publicly disclose the details of the action taken by them. Government sources told TOI that even RBI, which deals with the issue of NBFCs, was in the picture but the regulator could not be contacted for comments. In the past, RBI has, however, said it does not regulate all NBFCs but only a handful. Sources, however,said that in this case only a complaint about financing transactions was received and NSEL was not registered as an NBFC.      Even Sebi's role has come under the scanner given that the depositories — NSDL and CDSL — are regulated by it and were participating in e-series contracts related to gold and silver, which were suspended after the NSEL fiasco turned into a full-blown crisis. Sebi officials have maintained that they did not have to do anything with NSEL, which was regulated by the ministry of consumer affairs. REGULATORY LAPSES?  Consumer Affairs Ministry | Told Parliament it was examining NSEL related reports, did not act on FMC report for over 15 months  Finance Ministry | Told Parliament it was examining issues related to "illegal NBFC transactions"  Sebi | Depositories such as NSDL and CDSL, which were dealing with NSEL's e-gold and e-silver contracts, regulated by it  RBI | NBFC issue dealt by the regulator