Following Jignesh Shah’s willingness (?) to step down, it appears like Multi Commodity Exchange of India Ltd (MCX), the country's largest commodity exchange, will be run by the board of directors. Will the board have much interest in defending its market position and ensuring its growth? In a meeting, MCX board on Tuesday agreed to give Mr Shah more time (to step down) till the Forward Markets Commission (FMC) takes a decision on this matter.
Mr Shah is the non-executive chairman of MCX, while the only other person related with the promoter group is Paras Ajmera. While commodities market regulator FMC has appointed four directors, the National Bank for Agriculture and Rural Development (NABARD) has nominated one director on the MCX board. In short, MCX would be run by all nominated persons who may or may not have any interest in the growth of the company like a promoter. Nominees appointed by government-controlled entities may come and go, but what about the future of MCX itself? It would be interesting to see how the marquee MCX investors view this development.
Among the MCX’s investors are Euronext NV, Merrill Lynch Holdings, BNP Paribas, Blackstone and the Government of Singapore. However, with Mr Shah ready to move out of the picture, it would be hard for investors to expect a secular growth for the exchange.
At present, four independent directors, RM Premkumar, Ravi Kamal Bhargava, Dinesh Kumar Mehrotra and Santosh Kumar Mohanty are nominees of FMC. P Satish is the nominated by NABARD on MCX board as independent director. Paras Ajmera, the nominee of Financial Technologies (India) Ltd—FTIL, the main promoter entity of MCX, is a non-executive director of MCX. Just a few days ago, Shreekant Javalgekar, managing director and chief executive of MCX resigned. This leaves complete control of MCX in the hands of people who are not promoters. NABARD holds 3.06% stake in MCX but is not a promoter or a promoter group entity.
Mr Premkumar is a retired officer from the Indian Administrative Service (IAS) and he has been appointed as interim chairman of MCX. Mr Bhargava, another retired IAS officer was appointed as chairman of audit committee of MCX. Mr Mehrotra, who retired as chairman of Life Insurance Corp of India (LIC) in May was nominated by FMC on MCX board in July 2013. FMC also appointed Santosh Kumar Mohanty as director in place of Prakash Apte.
In a regulatory filing, MCX said its board has appointed five new directors. FMC has nominated G Ananth Raman, a retired officer from Indian Revenue Services (IRS) and Pravir Vohra as independent directors. With the two new appointments, FMC now has six nominee directors on MCX board.
The board also decided to appoint three representatives from banks as shareholder director. This includes KN Raghunathan (general manager for treasury at Union Bank of India), Sanjaya Agarwal (general manager for treasury and investment at Bank of Baroda) and P Paramasivam (general manager at Corporation Bank).
After the new appointments, the MCX board will have over 50% members nominated by FMC alone. Except Mr Shah and Mr Ajmera rest of the directors on MCX board are either nominees or representatives of non-promoter entities.
As per FMC norms, the board must have 50% independent directors. However, with Mr Shah’s willingness to step down, the MCX board will have over 90% nominated directors. This not only raises a big question over the future of MCX but also makes foreign investors to re-consider their decision to stay invested. After all, who would be interested, if there is nobody to grow the company?
NK Proteins' MD Nilesh Patel, also a son-in-law of NSEL's former chairman was arrested today. The EOW of Mumbai police arrested Patel who owed Rs930 crore the NSEL
Nilesh K Patel, managing director of NK Proteins Ltd, one of the biggest defaulters of National Spot Exchange Ltd (NSEL), was arrested by the economic offences wing (EOW) of Mumbai police. NK Proteins owed Rs930 crore to the troubled NSEL.
Patel is son-in-law of politician Shankarlal Guru, who resigned as chairman of NSEL on 19th August. In the same month, NSEL filed complaint against five of its defaulting members before the investigation authorities. This includes Ark Imports Pvt Ltd, Lotus Refineries Pvt Ltd, NK Proteins Ltd, Vimladevi Agrotech Ltd and Yathuri Associates.
However, Guru claimed lack of knowledge regarding his son-in-law's dealing or defaults. In a statement, NSEL Investors Forum (NIF), a representative body of investors in Spot Exchange, had said, "It clearly shows his (Guru's) complicity in the fraud and by resigning from chairmanship his involvement cannot be washed away. Guru should at least give some credit to the intelligence of investors and general public. A chairman cannot be an innocent bystander when a fraud of Rs5,500 crore is being committed and almost 20% has gone to his son-in-law. Investors are confident that the law will catch up with him sooner or later".
Speaking with PTI, Guru, who is also former member of Gujarat assembly, had said, “I understand he is my son-in-law, but if he has done the wrong thing, he should be punished for it. I have nothing to do with this. I am being associated with it as I was the board chairman".
NSEL, promoted by Jignesh Shah-headed Financial Technologies (India) Ltd (FTIL), is has failed to settle Rs5,600 crore due to 148 members/brokers, representing 13,000 investor clients, after it suspended trade on 31st July on government direction.
According to Chidabaram, the Indian government is monitoring top 30 non-performing assets in all state-run bank in each zone
Concerned over defaults by big borrowers, Finance Minister P Chidambaram on Tuesday said that the union government is monitoring the top 30 non-performing assets (NPAs) account in each state-run lender and asked the Banks to set up separate verticals to recover the money from written-off accounts.
Talking to reporters after meeting the heads of public sector unit (PSU) banks, Chidambaram said, “We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs1 crore) who are defaulting”.
Chidambaram said he hoped that NPAs are a function of economy and would improve with the recovery in economic growth.
The minister said the situation was not as bad as it was in 2000, when gross NPAs touched a high of 14%. NPAs, which plateaued over the years at about 2%, have started creeping up with the deceleration in growth in the past few years.
As of June, the gross NPA of nationalised banks was 3.89% and State Bank of India (SBI) group at 5.5%.
Chidambaram said like State Bank of India, other PSU banks should set up separate verticals to recover as much as possible from the accounts that were written off.
The Minister, however, expressed satisfaction over credit growth by PSU banks in the first and second quarters of the current financial year and expressed hope that it will remain “satisfactory” in the remaining part of the fiscal.
Chidambaram said housing loans recorded a healthy growth in the first and second quarters and rose 42% and 61%, respectively.
Education loans also registered growth, he said, adding that banks have been asked to meet the lending target with regard to minorities.
The minister said PSU banks will open 10,000 new branches and set up 34,668 onsite ATMs during the course of the current financial year.
Referring to the current account deficit (CAD), the finance minister said that the government does not intend to lift the ban on gold coins and medallions.
The government had imposed restrictions on import of gold with a view to contain CAD, which widened to an all-time high of 4.8% of GDP in 2012-13. During the current fiscal, CAD is expected to narrow to below 3.7% of GDP.