NSEL, FinTech 'fit and proper' status under scanner: Srcs

Arvind Mayaram panel is set to submit its report on the NSEL (National Spot Exchange Limited) fiasco on Saturday. CNBC-TV18 learns the ‘fit and proper’ status of the promoters of NSEL and Financial Technologies is under scrutiny as authorities find violations on various counts, reports CNBC-TV18’s Aakansha Sethi.

The report consists of three key aspects. The Mayaram Committee is a coordinating agency between various investigative agencies, which includes Enforcement Directorate (ED), the Income Tax Department and the Serious Fraud Investigation Office (SFIO) amongst others. Also read: Mayaram panel finds no systemic impact in NSEL mess: Srcs Independently, each of these agencies will take its action against NSEL depending violations. For instance the ED is likely to file FIRs (first information reports). Violations have been found for the Income Tax Act, the Prevention of Money-Laundering Act (PMLA), Forward Contracts Regulation Act (FCRA). The second aspect is the committee headed by KC Chakrabarty. It suggested that though they have not found any large systemic implications, they are going to make suggestions for systemic stability in the future. Strengthening of the Forward Markets Commission (FMC) may be one of the key recommendations. A merger of FMC and Sebi is also on the agenda. At the peak of the crisis now, these are unlikely to be taken. The third is whether Financial Technologies and the promoters and the board match the ‘fit and proper’. It is for the FMC to decide, sources say. Financial Technologies is not a regulated agency, they are looking at the National Exchange Policy and seeing if FMC, the promoters etc. meet the fit and proper criteria. If they do not, they will have to sell their 26 percent stake in MCX. The settlement issue will be looked into by the FMC. It is not in the purview of the committee at this point in time.