FMC levies penalty to discourage cash dealings in commexes
Press Trust of India / New Delhi Jun 19, 2009, 13:35 IST
Amid increasing cash transactions in the commodities market, the Forward Markets Commission (FMC) has directed the bourses to levy penalty on cash dealings over Rs 10 lakh.
There will be no charges on cash dealings up to Rs 10 lakh, while traders will have to pay 0.1 per cent of the value of commodities transacted if they wish to settle in cash, a directive issued by commodity market regulator FMC said.
"The move was taken to discourage cash dealings in commodities market," informed FMC member Rajeev Aggarwal.
Cash dealings are not supposed to take place in the commodity market. However, it was happening extensively. After an inspection, FMC decided to keep the penalty structure in place to discourage such practices, he said.
The FMC further added that transaction in cash with the clients were not desirable in the interest of members or clients as well as trade.
According to experts, there are no stringent rules even on leading exchanges MCX and NCDEX as far as cash dealings are concerned and the move will encourage transparent trading.
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