RBI seeks data to track hoarders

Seeks credit details of traders, firms dealing in agri commodities.

Apprehending a rise in prices of essential commodities due to a moderate-to-scanty rainfall in the country followed by floods now, the Reserve Bank of India (RBI) has asked all banks, including co-operative banks, to furnish details on credit to commodity traders and companies using agricultural commodities as raw materials.

This data primarily relate to working capital requirement and other forms of short-term loans. Banks would also have to explain as to why some loans were continuously being rolled over for months together, said sources close to the development.

Banking sources added that the move was aimed to stop hoarding of essential commodities. RBI has also instructed banks to conduct adequate due diligence for credit to such entities if the demand was more than normal. Demand above the normal level will be judged in terms of working capital or other form of short-term loans taken by the company/ trader in the last one or two financial years for similar period.

In early nineties, agricultural commodities were on the sensitive item list and lending rates for such items were regulated by the central bank. However, with interest rate deregulation, rates on such items were slowly deregulated.

Sources said, “It is not possible to control credit flow for such items even now. But the rise in prices of essential commodities, especially food items, has failed to moderate. Earlier, there was a fear of drought alone following the scanty rainfall, now there is flood. Thus it is necessary to see that the prices of such items should not go up following supply constraints. Towards this, one of the measures is to control credit for stocking of food items beyond a certain number of days.”

It could be mentioned here that the rising food prices have been a major cause of concern for the government’s efforts to contain inflation. Recently, RBI had also cautioned banks for checking exposure to real estate companies fearing an asset bubble. The government has also taken several measures on the fiscal side to curtail hoarding in the last two months, especially for items such as sugar and pulses. The ministry of consumer affairs and public distribution had put a stock-limit of 15 days for bulk consumers of sugar. This means a bulk consumer cannot store sugar of more than 15-day requirement. Similarly, every state has been advised to put stock limits for sugar usage.

Last month, the government had advised all importers of sugar and pulses to move out the commodities from godowns at various ports within three days of receiving the imported quantity.