The Hindu Business Line : Banks can allow cos to hedge commodity price risks

THE Reserve Bank of India has allowed select commercial banks (authorised dealers) to grant permission to listed companies to hedge their price risk in respect of any commodity except gold, silver, petroleum and petroleum products, in the international market.

Until now, such permissions were granted by RBI to companies on a case-by-case, subject to certain conditions. The banks have to fulfil certain norms and are required to get prior RBI approval before granting permission to companies, RBI said in a notification today.

The minimum norms which are required to be satisfied by the banks are continuous profitability for at least three years, minimum CRAR of 9 per cent, net NPAs at reasonable level but not more than four per cent of net advances and minimum net worth of Rs 300 crore, the notification said.

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