Union Government on 21 October 2014 ordered merger of the scam-hit firm, National Spot Exchange Ltd (NSEL) with its holding company Financial Technologies India Ltd (FTIL).
The Union Ministry of Corporate Affairs has issued a draft order by invoking Section 396 of the Companies Act for the merger. This is the first time that a listed entity in the private sector has been involved in a Section 396 order of the Union Government.
The decision was made to ensure recovery of dues for investors and others who were hit by 5600-crore rupees fraud at the National Spot Exchange Ltd. The decision has been taken in essential public interest as the exchange was not left with any viable, sustainable business while FTIL has necessary resources to facilitate speedy recovery of dues.
Government took the decision of merger of NSEL and FTIL, a year after the scam broke out at NSEL in July 2013. This move is possibly the first major government intervention in a scam-hit private sector entity, since the Satyam case came in light in 2009.
At present, the Economic Offences Wing of Mumbai Police is probing the 5600 crore rupees NSEL scam and has so far attached movable and immovable assets worth nearly 6000 crore rupees belonging to all the accused of the scam.
About National Spot Exchange Ltd (NSEL)
National Spot Exchange Ltd (NSEL) was set up as an electronic exchange for spot trading in agriculture and food commodities by Jignesh Shah-led Financial Technology Group. The Financial Technologies (India) Ltd is the holding company the group, which had also set up commodity bourse MCX and stock exchange MCX-SX, among other exchange ventures.
When: 21 October 2014