The Hindu Business Line : `Allow banks to act as farmers' brokers in commodity exchanges'

THE National Commodity and Derivative Exchange (NCDEX) has urged the Union Government to allow banks to act as brokers on behalf of farmers in the commodity exchanges.

The formal request was sent to Union Ministry of Finance, Union Ministry of Agriculture and the Reserve Bank of India. This was stated by Mr Ravi Poddar, Managing Director of NCDEX.

He was addressing the members of the Bengal National Chamber of Commerce & Industry at a seminar on `Commodity Exchanges - Its role in bringing Revolution in Marketing of Indian Commodities.'

According to Mr Poddar, the present rules and regulations do not allow all banks to participate in the commodity hedge markets. He felt that if the rules are changed then the banks can hedge their exposure in the agricultural sector.

He urged the Union Government to change the necessary banking norms and the subsequent rules and regulations as early as possible. "We hope that it would change by the end of this year," Mr Poddar said.

In the last financial year, 2004-05, the total trade on the three commodity exchanges was Rs 5.5 lakh crore. He said that an Assocham report had predicted to grow to Rs 10 lakh crore by 2009.

Mr Poddar was even more optimistic. He hoped that in the current financial year the total trade is likely to double from that of the last year's level.

At present, NCDEX has 6,000 terminals throughout the country. During the next five year, he said, it would jump to 20,000.

Regarding the futures trading in natural gas, Mr Poddar said, a formal clearance is likely to come by the end of this month. NCDEX has already entered into an agreement with GAIL for this purpose.

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