ET BureauWhen the central government urges states to dismantle the Agricultural Produce Marketing Committee Act or at least to remove perishable produce from its ambit, it needs to complement the move with the promotion of electronic spot exchanges.
The NCDEX-promoted exchange is at work. National Spot Exchange, the one promoted by rival commodity trader MCX, or rather, group sponsor, Financial Technologies, lies trapped in scam, ignominy and legal shackles. It is time for the government to bring this exchange out of deep freeze, release it from the control of the promoter group and put it to work to bring farmers and agri-buyers together.
NSEL was run to the ground by mismanagement, allegedly deliberate, by the exchange's minders, and lax regulation. Some Rs 5,600 crore of investors' money has been locked up. In no previous market scam have investors got back what they lost. In the case of the NSEL scam, the chances of recovery are good.
The Economic Offences Wing investigating the scam has identified and attached assets of the defaulters on a scale large enough to cover investor losses. What is missing is legal action to liquidate the assets and transfer the money to investors, while penalising those who submitted effectively fraudulent warehouse receipts to trade on the exchange, and those at the exchange who turned a blind eye, if not actively colluded in the fraud.
If the law is allowed to take its normal course, NSEL would be dug up by next century's archaeologists. If the government wants to set a new benchmark, and restore to investors, within one year of the scam having been uncovered, the money of which they were defrauded, it will take political will. Having done that, the exchange can be brought under new corporate control and allowed to run again under proper supervision.
The NCDEX-promoted exchange is at work. National Spot Exchange, the one promoted by rival commodity trader MCX, or rather, group sponsor, Financial Technologies, lies trapped in scam, ignominy and legal shackles. It is time for the government to bring this exchange out of deep freeze, release it from the control of the promoter group and put it to work to bring farmers and agri-buyers together.
NSEL was run to the ground by mismanagement, allegedly deliberate, by the exchange's minders, and lax regulation. Some Rs 5,600 crore of investors' money has been locked up. In no previous market scam have investors got back what they lost. In the case of the NSEL scam, the chances of recovery are good.
The Economic Offences Wing investigating the scam has identified and attached assets of the defaulters on a scale large enough to cover investor losses. What is missing is legal action to liquidate the assets and transfer the money to investors, while penalising those who submitted effectively fraudulent warehouse receipts to trade on the exchange, and those at the exchange who turned a blind eye, if not actively colluded in the fraud.
If the law is allowed to take its normal course, NSEL would be dug up by next century's archaeologists. If the government wants to set a new benchmark, and restore to investors, within one year of the scam having been uncovered, the money of which they were defrauded, it will take political will. Having done that, the exchange can be brought under new corporate control and allowed to run again under proper supervision.
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