STUDY OF NSEL SCAM AND IMPACT ANALYSIS OF FTIL – NSEL MERGER

Abstract

The National Spot Exchange Limited (NSEL), the fully owned subsidiary of Financial Technologies (India) Limited (FTIL) was hit by a scam which affected the market, the regulators, investors and all other stakeholders and a discussion started about the lapses of corporate governance and lapses on all front by the NSEL and even by the regulators. Recently, the government has notified to merger NSEL with its parent FTIL. FTIL has challenged this notice into the Bombay High Court as it will have to bear Rs. 5500 crore liability of NSEL. This study aims at understanding the genesis of the NSEL scam and its impact of the first forced merger by the Government of India on all stakeholders. Various documents have been referenced and all the data available have been analysed to find out the root cause of the NSEL scam. Annual reports of both companies along with the guidelines laid by the government have also been analysed to find out the impact of merger order on all the stakeholders. Through this study it has been tried to provide insight of all the happenings which led to closing of NSEL and now the amalgamation order by government in a neutral manner considering all facts and implications.