NSEL Crisis : When will investors be paid back?

As the case drags on in the courts, investors are wondering as to when they will get back their investment from NSEL

As the case drags on in the courts, investors are wondering as to when they will get back their investment from NSEL
As the case drags on in the courts, investors are wondering as to when they will get back their investment from NSEL

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]I[/dropcap]t has been over 3 years since the Rs. 5600 crores ($838 million) payment crisis at the now defunct NSEL (National Spot Exchange Ltd) a commodity trading exchange.  There have been agitations by investors, multiple high profile arrests, property attachments, numerous court cases. However, the one major thing missing is that no significant payment has yet been made to the investors so far.

Depending on who you speak to, you will get different reasons for what led to the crisis; but each one of these played its part in inflating the bubble to Rs.5600 crores ($838 million).

There is the usual blame game of who is responsible for this crisis. Some of the most common reasons cited are

Depending on who you speak to, you will get different reasons for what led to the crisis; but each one of these played its part in inflating the bubble to Rs.5600 crores ($838 million).

Various steps have been taken before and after the crisis to try and bring relief to the investors. Major amongst them include:

  1. designating the Forward Markets Commission (FMC) as the regulator for NSEL,
  2. FMC halting trading in the disputed contracts,
  3. applying MPID (Maharashtra Protection of Interest of Depositors in Financial Establishment Act) in this case
  4. arrests of various stakeholders which include defaulters, brokers, employees & promoters of NSEL
  5. investigations by various agencies including Mumbai EOW(Economic Offences Wing), FIU (Financial Intelligence Unit), CBI (Central Bureau of Investigation) & ED (Enforcement Directorate) .
  6. Attachment of properties by EOW & ED which in total are said to be valued more than Rs. 5,600 crores ($838 million)
  7. Merger of NSEL with its parent company
  8. SEBI investigation on the role of brokers in the NSEL crisis
  9. Setup of special court for all NSEL cases
  10. Detailed investigation and report by Special Team of Secretaries (STS)
  11. Periodic review by Secretary, Department of Economic Affairs, of actions based on the STS review

For any person who has been cheated out of their money, the above seems to be an outstanding list of actions that could help them recover their hard earned money. Unfortunately, that is not the case for investors of NSEL. Despite what seems to be a comprehensive set of steps taken, the investors are hardly any closer to recovering their money. Some investors even feel that the situation has continued to become more convoluted due to the judicial process with no hopes of recovery in sight.

In such a situation what practical steps can be taken to speed up the process of recovery so that investors get their money back?

To be continued…

Note:
1. The conversion rate used in this article is 1 USD = 66.84 Rupees.
2. Text in Blue points to additional data on the topic.

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Aashish Shetty

Aashish is a technology & finance professional with many years of global experience in multiple roles.

He is a frequent contributor on Banking, Money, Investing, Technology and Education.

Detailed bio & posts - https://www.pgurus.com/as/
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5 COMMENTS

  1. INVESTIGATION, COURT , AGENCY TAKE MANY YEARS TO RESOLVE CRISIS
    INVESTORS WHO INVEST WILL NOT SEEN COLOUR OF MONEY AND DIE
    GOVT MUST WAKE UP AND ALL COURT CASES SHIFTED TO SUPREME COURT
    IMMEDIATELY AND JUDGEMENT SHOULD DELIVER WITHIN TIME BOUND EXCERCISES

    • unfortunately that’s not how our Judicial system works.

      Best thing to aim is to try and liquidate whatever possible and start refunding money

  2. Looking to past 3 years fighting with state and central govt, what is the out put? Many investor die due to high tension of loosing hard earn money.& result may come after all investor will die.
    Where is law and justice ? Why so much lengthy period of time? Even govt. change in 5 years? What is the value of BJP promise? People give lot up votes to BJP, with expect ion corruption will minimise . What happen,now you are in Delhi,laws are in your hand. Even though no out put. What it shows????
    Retired NSEL investor.

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