FX.co ★ India Eyes Deeper Commodity Liquidity via Bank Participation

India's Securities and Exchange Board (SEBI) along with the Reserve Bank of India (RBI) are exploring the possibility of permitting commercial banks to participate in commodity derivatives trading. This initiative aims to boost market liquidity. SEBI Chairman Tuhin Kanta Pandey has confirmed that discussions are underway with the RBI to establish a framework that would allow financial institutions "prudential access" to these markets. Should this proposal be implemented, it would represent a further step in relaxing the restrictions on capital deployment for banks. This initiative follows the RBI's recent announcement in October, which granted banks the authority to finance mergers and acquisitions, thereby seeking to invigorate India's deals market, which is worth over USD 40 billion.