Capital market regulator Securities and Exchange Board of India (Sebi) is probing allegations of fraud and irregularities at Metropolitan Stock Exchange of India (MSEI).
The probe has been initiated after complaints from two whistleblowers who have highlighted issues relating to governance, mismanagement and the siphoning of funds at the exchange.
The issue came to light after Minister of State for Finance P Radhakrishnan's written reply in the Lok Sabha.
In their complaints, the whistleblowers have levelled allegations against officials of the exchange, including Udai Kumar, MD and CEO of the exchange. Allegations have also been levelled against brokers.
"The complaints have been examined in detail by Sebi and as an interim measure, directions have been issued to the governing board of MSEI to constitute a Committee of Public Interest Directors (PIDs) to examine all the allegations levelled by whistleblowers against the management of MSEI," Radhakrishnan said in the reply.
"Based on the recommendations of the Committee of PIDs, to take suitable action against the entities/persons found to be involved in the malpractices," he added.
MSEI has engaged the services of forensic auditor for the purpose of examination, including on assessing the actual magnitude of fraud. Allegations against brokers are separately looked into.
Kumar has been directed to go on an indefinite leave to ensure fair and uninterrupted examination of the charges levelled in the complaints of the whistleblowers.
MSEI, formerly known as MCX-SX, was founded by the Multi Commodity Exchange (MCX) and Financial Technology India (FTIL). Following the National Spot Exchange (NSEL) fraud, the exchange had to undergo a change in shareholding and manegement.
The current shareholders of MSEI include State Bank of India, Union Bank of India, Bank of Baroda and Punjab National Bank. These banks put together hold 12.7 per cent.