Claiming that nearly three dozen small- and mid-sized firms had been affected, PD Sharma, president, Apex Chamber of Commerce & Industry (Punjab), said nearly a dozen cases had been filed in various courts alleging that private banks conned them into placing such bets.
Sharma added that many small and medium textile and steel firms stood to lose as much as Rs 10-20 crore. "Currency derivatives involving currencies like the US dollar, Swiss franc and Yen were sold to firms. The deals were in favour of the banks and the firms are now facing heavy losses," he said.
In a public appeal, the chamber urged Finance Minister P Chidambaram and RBI Governor YV Reddy to intervene and save the affected businesses.
"Currency derivative products are pure speculation and should be banned," Sharma said, adding that the companies entered into derivative transactions to hedge against adverse currency movements that have a bearing on their earnings.
Sharma alleged that derivatives without proper underlying assets were sold with the aim of speculation and not hedging, which is against RBI policy.
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"Instead of the purchaser, companies have been made option writers, which is prohibited by the RBI, thereby exposing them to huge loss," the chamber said in its appeal. It also alleged that banks devised special products like currency derivative deals and sold them "over the counter like a tailored suit".
"Innocent clients were enticed to take these products as a hedge against severe volatility in commodities and currencies," it added.