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| FMC levies penalty on cash dealings over Rs 10 lakh |
| BS Reporter / Mumbai Jun 19, 2009, 00:27 IST |
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The commodity markets regulator the Forward Market Commission (FMC) has directed commodity exchanges to levy non-compliance charges on high value cash dealings.
According to the FMC circular issued on Thursday, cash transactions upto Rs 10 lakh will attract no charges while traders will have to pay 0.1 per cent of commodities’ transaction value if they wish to settle in cash.
“The move was to discourage cash dealing in commodity space,” Rajeev Agarwal, member of the FMC, said.
Cash dealings are not supposed to take place in commodities’ derivatives markets, But, it has been happening quite extensively. FMC after thorough inspection found cash dealing rampant in the market and hence, decided to discourage such practices, Agarwal said.
The circular further says that transactions in cash with the clients were not desirable in the interest of members or clients as well as trade.
The directive is in line with other exchanges that have already been levying such penalties, said Ananda Kumar, chief of corporate services of the National Commodity & Derivatives Exchange (NCDEX).
Although, all cash trans-actions have been reported to the exchange in the past yet, the measure was taken to restrain members and clie-nts from cash dealings, Kumar added.
According to trade sources, a majority of small and medium size players were settling transactions largely in cash to evade other levies including income tax.
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