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Commodities Buzz: Banks Increasingly Getting Exposed To Agri Business Risks Says NCDEX

Capital Market/ 12:20 , Aug 05, 2013

With increased focus on priority sector lending, banks are increasingly getting exposed to agri business risks; arising from volatility in commodity prices, according to a latest press release from the National Commodities and Derivatives Exchange (NCDEX). The Need for commodity risk management for banks highlighted at joint workshop conducted by NCDEX and NIBM

Banks play a critical role in financial inclusion by providing small stakeholders, the SME sector and the farm community with access to credit. With increased focus on priority sector lending, banks are increasingly getting exposed to agri business risks; arising from volatility in commodity prices. Risk management for banks is therefore the need of the hour. Commodity exchanges offer products and services that are specifically designed to help the banking sector manage their price exposure to commodities.

Samir Shah, MD In-charge, NCDEX said that as lenders to various segments of the commodity economy, banks are having to sharpen their focus on risk management and encouraging their clients to hedge using tools like commodity futures will be a step towards building a healthy agri business.

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