The Hindu Business Line : Federal Bank’s commodities scheme

Kochi, Aug. 19 The Aluva-based Federal Bank has formulated a new scheme for financing delivery-based futures trade in agricultural commodities. The scheme was launched here on Friday. The day was also celebrated throughout the State as Farmers Day.

Mr B.C. Khatua, Chairman, Forward Markets Commission (FMC) launched the scheme, at a meeting which was presided over by Mr M. Venugopalan, Chairman, Federal Bank.

Mr Venugopalan said the bank was getting ready to finance delivery-based trade in all agricultural commodities throughout the country in the days to come. Under this scheme, customers can get loan up to 85 per cent of the futures selling price. Besides, the bank will also fund both the initial margin and the daily mark-to-market (MTM).

MTM funding

Since the bank does MTM funding, the client need not worry about the price fluctuations. On the settlement day, the surplus amount after adjusting the loan will be credited to the customer’s account, he said.

Small and marginal farmers can get the benefit of this scheme through their registered societies who would be capable of taking positions with the commodity exchanges.

The commodity has to be kept in the exchange approved warehouses and the warehouse receipts could be in physical or demat form.

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