Is Satyam-style takeover of NSEL possible?

The Arvind Mayaram Panel is contemplating a government takeover of National Spot Exchange Limited (NSEL), similar to what was done in the Satyam scandal, reports CNBC-TV18's Aakansha Sethi.

Also read: MCA widens NSEL probe; seeks details of related entities

The panel has given various options for different investigatng agencies and has asked the Ministry of Corporate Affairs (MCA) to examine if the government's takeover could be a possible route.

While the Central Bureau of Investigation (CBI) is likely to look for Indian Penal Code (IPC) violations, the IT Department will follow up with income evasions, and the Forward Markets Commission (FMC) will investigate if the exchange violated the Forward Contracts Regulation Act (FCRA).

For violations of the FCRA, Financial Technologies promoted-NSEL was given an exemption by the then Food Minister Sharad Pawar. The only action that can perhaps be taken is to ascertain whether NSEL promoters are fit-and-proper.

Sources in the government have said that they are unlikely to be fit and proper and hence that could have an implication on the 26 percent stake that they hold in Multi Commodity Exchange of India ( MCX ). However, prosecution under FCRA will be limited and hence, the government is examining whether the promoter and those who are guilty can be prosecuted.

As far as criminal proceedings are concerned, the Economic Offences Wing (EOW) has not registered a case as yet and till the EOW does not register a case and criminality is not established the Enforcement Directorate (ED) cannot register a case and examine the possibilities of money laundering.

Hence, until criminality is proved, there is really no tangible action that will be taken i.e, examining if the government can take over the NSEL board and can proceed the Satyam way.