Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: ACCOUNTING STANDARDS :: VAT Audit :: VAT RATES :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TDS :: Central Excise rule to resale the machines to a new company
 
 
Latest Circulars »
 Payment Systems - Next Orbit (Shri R. Gandhi, Deputy Governor - February 20, 2017 - at the launch of Bharat QR Code at Hotel Trident, Mumbai)
 Financing MSMEs: Banks & FinTechs – Competition, Collaboration or Competitive Collaboration? (Shri S. S. Mundra, Deputy Governor – February 20, 2017 – at the NAMCABS Seminar organized by College of Agricultural Banking in Mumbai)
 Issuance of Rupee denominated bonds overseas – Multilateral and Regional Financial Institutions as Investors
 RBI-Formation of twenty one new districts in the State of Telangana - Assignment of Lead Bank Responsibility
 RBI imposes penalty on Janata Urban Co-operative Bank Ltd., Wai, District Satara
 Monitoring of Foreign Investment under PIS in Indian Companies- Incorporation in Ban List–M/s HDFC Bank Ltd.
 Reserve Bank of India seeks Comments on Draft Circular on Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions
 Forward Rate Agreement (FRA) and Interest Rate Swap (IRS) - Withdrawal of Fortnightly return
 RBI-Foreign Investments in India
  RBI cancels the Licence of the Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra
  Finance Minister meets the Directors of the RBI Central Board

Rbi-Deferred Payment Protocols dated April 30, 1981 and December 23, 1985 between Government of India and erstwhile USSRRBI-Hedging of Commodity Price Risk - Creating awareness among borrowers
June, 01st 2015

RBI/2014-15/612
DBR.No.BP.BC.96 /21.04.157/2014-15

May 28, 2015

The Chairman and Managing Director/Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)

Dear Sir / Madam,

Hedging of Commodity Price Risk - Creating awareness among borrowers

Banks provide a number of credit facilities to customers engaged in activities related to agriculture. One of the prominent, albeit indirect, risks in this sector is that of volatility in agricultural commodity prices. Generally, this risk is more pronounced in cases where agricultural borrowers do not hedge the underlying agri-commodity price risk. Hedging of the agri-commodity price risk is beneficial to both the borrowers and the banks and, hence, it is desirable that a risk management culture is fostered amongst the stakeholders including agri-borrowers and banks.

2. Presently, hedging tools including derivatives are available in the Indian market, but these are not being used extensively due to lack of awareness of the products or their inherent complexity.

3. With a view to developing strong risk management capabilities to manage agri-commodity price risk, it is felt that banks should encourage hedging by the agri-borrowers by creating awareness amongst them regarding the utility and benefits of hedging through agri-commodity derivatives. At the same time, banks must keep the sophistication, understanding, scale of operation and requirements of their agri-borrower in mind while advising on the availability and use of these instruments.

4. To begin with, banks may encourage large agricultural borrowers such as agricultural commodity processors, traders, millers, aggregators, etc., to hedge their commodity price risk. The hedging can be through agri-commodity derivative products available on recognised exchanges in India. Banks may educate their customers about the suitability and appropriateness of using these products for hedging specific exposures so that these customers can take an informed decision, lessening the scope for mis-selling of these derivatives.

Yours faithfully,

(Sudarshan Sen)
Chief General Manager-in-Charge

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Publishing Management System PMS News Management System Publishing Management System Development Online News Management System for media company custom Publishing management system development Survey management system Market Res

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions