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Federal Bank launches scheme for futures trade

KOCHI: Federal Bank on Friday launched a new scheme for financing delivery-based futures trade in agricultural commodities.

B.C. Khatua, Chairman, Forward Markets Commission (FMC), launched the scheme. M. Venugopalan, Chairman, Federal Bank, presided over the function.

Speaking on the occasion, Mr.Khatua said FMC was keen on achieving uniformity in commodities exchanges. A meeting of regional exchanges was being planned. He admitted that there was some decline in the volume of the trade owing to various reasons, including the restrictions imposed on the trade on some commodities.

Rajeev Kumar Agarwal, member, FMC, P.H. Ravikumar, Managing Director, National Commodity and Derivatives Exchange Limited, Kailash R. Gupta, managing director, National Multi-Commodity Exchange of India Limited, Joseph Massey, Deputy Managing Director, Multi-Commodity Exchange of India and P.C. Cyriac, Director, Federal Bank, spoke.

Representatives of farmers’ co-operative societies, rubber producers’ societies, rubber trading companies, dealers’ associations, major commodities broking companies and customers of the bank attended the meeting.

Under the scheme, customers can get loans up to 85 per cent of the futures selling price. The client need not worry about the price fluctuations and he can forget about the ups and downs in the futures price till the settlement date. On the settlement date, the surplus amount, after adjusting the loan, will be credited to the customer’s account, according to the bank.

The scheme will be beneficial to the farmers who require funds and at the same time want to sell in futures market to get the benefit of a higher price, according to the bank. Small and marginal farmers can avail themselves the benefit of this scheme through their registered societies who will 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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