The Reserve Bank of India (RBI) has constituted a working group on exposure of Indian entities to commodity price risks owing to growing integration of the Indian economy with the global economies and increased volumes of cross-border trade. The working group will review the guidelines for hedging of commodity price risk by Indian residents in the overseas markets. The country’s domestic commodity derivative market is still developing and yet to mature. The Working Group comprises members from RBI, Securities and Exchange Board of India (SEBI), commercial banks and Indian companies.
The main areas of consideration before the Working Group on commodities price hedging are:
- Assess the risks faced by resident entities and their hedging requirements,
- Identify gaps in the existing regulatory framework in relation to the hedging requirements viz. coverage of commodities, participants and products,
- Suggest the broad principles for guidingĀ the regulatory regime for overseas hedging of commodity risks,
- Recommend a modified framework for residents hedging commodity risk overseas,
- Any other related matter.
The Working Group may also consult representatives from various industries for drawing information, suggestions and recommendations. The Indian companies and entities with direct exposure to commodity price, industry bodies, academics and other interested parties have been invited to share their suggestions and comments via email to [email protected].
The Group will submit its report by February 28, 2017.