An RBI working group has recommended that banks should be allowed to participate in agriculture derivatives trading on propritery basis within certain prudential limits and also permit them to offer futures-based products to farmers.If the recommendation is accepted, it will provide the banks a facility to hedge against the price fluctuation of the banking sector’s huge agriculture credit portfolio. A working group on Warehouse Receipts and Commodity Futures, constituted by RBI has submitted its report saying, ‘‘We recommend that the Centre may issue a notification under clause (O) of sub-section (1) of Section 6 of the Banking Regulation Act, 1949, for permitting banks to deal in the business of agricultural commodities including derivatives. Further, it recommended that the Forward Contracts (Regulation) Act, 1952 should be amended, and Forward Markets Commission (FMC) should evolve a framework for introducing options trading in agri commodities in India.
