The Supreme Court today adjourned hearing in the alleged derivatives scam after Fimmda, an association of bankers trading in bonds and derivatives markets, sought time to go through reports submitted by the exporters who have suffered losses.
A Bench of justices Dalveer Bhandari and Deepak Verma adjourned the final hearing for three weeks after the Fixed Income Money Market Derivatives Association of India (Fimmda) sought time to go through the reports on global derivatives transactions submitted by the exporters.
Derivatives are complex business contracts that aim to minimise or hedge investment risks. They can also be used for making money through speculation.
Some of the common derivative instruments include futures contracts, forward contracts, options and swaps and involve assets like stocks, bonds, commodities, currencies, interest rates and market indexes.
Forex Derivatives Consumers Forum, an association of exporters has submitted documents ranging from International Monetary Fund, Hong Kong Securities and Exchange Commission, and the Reserve Bank of India (RBI) to Financial Crisis Enquiry Commission, USA, over global derivatives transactions.
During the last hearing on November 8, 2010 the Bench wanted to know about the nature and impact of derivatives transactions and related developments. Following it, the exporters submitted the papers.
Exporters have alleged that the member banks of Fimmda, by violating RBI and FEMA guidelines, issued derivatives and caused them losses of more than Rs 32,000 crore.
Before that, on March 15, the Supreme Court had stayed an order of the Orissa High Court which had directed a probe by CBI against alleged violation of rules by Fimmda members.
The High Court ordered CBI probe on a plea by businessman Pravanjan Patra, who alleged sale of forex derivatives to exporters in gross violation of RBI's foreign currency laws and the Foreign Exchange and Management Act (FEMA).
However, CBI in its reply filed before the apex court told that some of the allegation made against the banks were found to be false.
CBI said it was a "herculean task" for them to probe the entire matter. It suggested in its reply that such a probe should be conducted by the ED and RBI.
