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NSEL Spot Exchange Scam

March 14, 2014 by KRS Leave a Comment

CBI registers case against NSEL promoter Jignesh Shah

  • Jignesh Shah-headed Financial Technologies India Limited promoted National Spot Exchange Limited (NSEL) whose operations were suspended after it failed to clear dues worth Rs.5,600 crore to 13,000 investors.
  • Investigations revealed:
    • NSEL claimed to have its own designated warehouses where listed saleable commodities were to be deposited in advance
    • NSEL would issue scanned ‘warehouse receipts’ for the same
    • under a separate contract,the producer would sell the purchased commodity to buyer through transfer of these receipts against simultaneous delivery of funds
    • this would be realised that day itself
    • thereon, investor would sell purchased commodity to second-tier investor under a separate contract
    • there was a gestation period for effective exchange of warehouse receipts & second-tier investor’s payment of due funds
  • After 24 buyers and their clients defaulted on payment of due to the exchange, the crisis was unearthed.
  • When enquiries were made by first-tier investors,  it was found that NSEL had no virtual designated warehouses to liquidate the commodity stock against investments.

Exams Perspective:

  1. Spot Exchange Scam
  2. CBI
  3. National Spot Exchange Limited (NSEL)

 

Filed Under: Current Affairs, Economy, National Tagged With: CBI, National Spot Exchange Limited (NSEL), Spot Exchange Scam

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