The Hindu Business Line : Geojit sets up company to fund futures trading

The company will focus on the credit requirements of participants in the commodity futures markets and credit will be extended on the basis of warehouse receipts, according to Mr C.J. George, Managing Director of Geojit Financial Services.

To start with, the company will be funding the sellers in the commodity futures market, including farmers.

Later the credit scheme will be extended to buyers of commodity futures as well.

In the private sector, Geojit will be the first company to make a foray into extending credit for commodity futures, next only to banks such as ICICI Bank, Corporation Bank, and Punjab National Bank.

Since most of the banks are new to the field and even the existing players have limited experience in commodity futures, a large number of banks are willing to extend support to the new venture.

Additionally, whatever lending the banks undertake through the new company would be considered as priority sector credit, Mr George said.

Currently, participants in the commodity futures have to wait for a maximum period of three months for a settlement cycle to close before they can recover their investments.

The new company will be extending 80 per cent credit on striking the contract and producing the warehouse receipt.

Geojit will hold close to 50 per cent equity in the new company, while the promoters of Geojit, including Mr George and Kerala State Industrial Development Corporation, will hold the rest.

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