RBI may announce ceiling on banks’ exposure to commodity futures
By allowing banks to trade in futures, the finance ministry wants to deepen the commodities market and, in the process, ensure farmers to get better returns for their produce. The ministry is also mindful of the fact that since India has mostly small and marginal farmers, not many of them would be keen on products relating to commodities markets.
Sources said more than the domestic banks, foreign banks are keen to immediately participate in commodities derivatives trading due to their vast expertise in the area owing to their experience in having played in different commodity markets overseas.
Indian banks also may also look at developing the requisite expertise and resources in the business before taking the plunge. Currently, they have some experience in commodities trade, especially in importing and selling pf gold with permission from RBI. Besides, they are also closely involved with farmers due to their lending to the farmers as agriculture is a priority sector. Though most farmers do not indulge in commodities trading, banks are hopeful of developing products for them in the future.
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