Chandan Sinha Panel Proposes to Hedging Commodities in Global Markets

Published on November 18, 2017
A Working Group of RBI headed by Chandan Sinha has proposed RBI to hedge commodities in global markets.

  • The panel has made a "positive list" of commodities comprising metals, energy and agro products which can be hedged in the overseas markets by domestic traders.
  • Presently, most of the hedging activities are in base metals through a reasonably wide variety of products are hedged offshore by Indian corporates.
  • The proposed list includes gold, silver, zinc, tin, crude oil and its derivatives, coal, natural gas, tea, coffee, sugar and cocoa.
  • One of the 10 recommendations of the Group also pertains to banks in the hedging activities.
  • The panel also suggested to implement a uniform approach in extending facilities to hedge commodity price risk in overseas markets that is agnostic to the place of procurement of the commodity.
  • The Reserve Bank had set up a working group to review the guidelines for hedging of commodity price risk by residents in the overseas markets during the development phase of the domestic commodity derivative market.

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