Federal Bank to finance futures trade in agri-products

Kochi, Aug 17 (UNI) The Federal Bank today launched a new scheme for financing delivery-based futures trade in agricultural commodities under which customers can get loans up to 85 per cent of the Futures Selling Price.

Launching the scheme at a function here, Forward Markets Commission Chairman B C Khatua described it as a ''pioneering effort'' which promised to boost trade in the futures market and help farmers.

Federal Bank Chairman M Venugopalan said the bank would finance delivery-based trade in all agricultural commodities throughout the country in the days to come.

At present, the scheme had been launched only in Kerala, he said.

Under the scheme, the bank would fund both the initial margin and the daily 'Mark-to-Market' (MTM). Since the bank would do MTM funding, the client need not worry about price fluctuations. On the settlement date, the surplus amount after adjusting the loan would be credited to the customer's account, he said.

Stating that the scheme would be highly beneficial to farmers who required funds and at the same time wanted to sell in Futures Market to get the benefit of higher prices, Mr Venugopalan said small and marginal farmers could benefit through their registered societies.

The commodity would be kept in exchange-approved warehouses and the warehouse receipts could be in physical or demat form, he said.

National Multi-Commodity Exchange of India MD and CEO Kailash Gupta stressed the need for institutional credit to farmers, in the absence of which they were at the mercy of local money lenders.

Also present on the occasion were FMC Member Rajeev Aggarwal and National Commodity and Derivatives Exchange Ltd MD and CEO P H Ravikumar.

UNI