RBI panel to examine commodity hedging

MUMBAI, July 25: The Reserve Bank of India RBI has appointed a nine-member committee to examine various issues relating to hedging agains...

MUMBAI, July 25: The Reserve Bank of India RBI has appointed a nine-member committee to examine various issues relating to hedging against price-risk through international commodity exchanges. The RBI deputy governor R V Gupta will be the chairman of the committee which is expected to submit its report by November 30 this year.

Other members of the committee are Dipak Chatterjee additional secretary, Union Commerce Ministry, Kamal Kishore economic adviser, Union Food and Consumer Affairs Ministry, P R Suresh officer on special duty, Union Finance Ministry, S D Kapur director of MMTC, S N Sawaikar DGM, State Bank of India, Paven Sukhdev head of treasury, Deutsche Bank, Lester Pereira director, Barclays Bank and Jamal Mecklai partner, Mecklai and Mecklai, Mumbai.

The terms of reference of the committee will be as follows:

To identify important import/export commodity groups where price volatility affects Indian corporates and where such risks can be hedged through recognised international commodity exchanges.

To carry out a review of the financial instruments available on the said commodity exchanges,and examine their appropriateness with reference to the stated objective of risk reduction attendant costs and constraints associated with internal control systems and position-tracking.

To examine/identify the important facets of an appropriate corporate-level risk management policy/strategy and make suitable recommendations, examine the extent to which ex ante8217; and ex post8217; scrutiny/verification can be undertaken by the regulatory authorities, and finally, suggest a set a operational parameters with reference to which the use of such financial instruments can be regulated/overseen.

To examine the nature and extent of legal impediments, if any, which bar the recourse of Indian entities to international commodity exchanges, and the steps the need to be taken in this behalf. The secretariat to the committee will be provided by the RBI.