SBI eyes 25 per cent holding in MCX

State Bank of India had decided to pick up 10 per cent equity stake in Multi Commodity Exchange of India (MCX) and was at present negotiating for additional 12 per cent to 15 per cent stake in the commodity exchange.

Talking to Business Standard, A K Purwar, chairman of State Bank of India (SBI), said, "SBI has firmed up plans of acquiring 10 per cent in MCX and is negotiating for additional 12 to 15 per cent stake."

State Bank of India has been planning to enter the commodity exchange derivatives arena, which has considerable business potential, for quite some time. Acquiring stake in the exchange was part of this plan.

SBI had sought the approval of the Reserve Bank of India (RBI) to buy into the exchange.

A couple of other state owned banks were also reportedly gearing up to buy equity in commodity bourses as institutional players.

These included Punjab National Bank, a promoter of the National Commodity and Derivatives Exchange (NCDEX).

Bank of India and Union Bank were also assessing opportunities in his segment.

The Banking Regulation Act in its present form does not permit banks to deal in commodities, but allowed trade in bullion. Banks were waiting for fresh RBI guidelines on this.

"There is a considerable business to be tapped across a range of clients, including farmers, manufacturers and traders," explained Purwar.

"SBI aims to tap this segment by offering a range of derivative products across major commodity asset classes by using its retail network," he added.

MCX was likely to offer 10 per cent equity for Rs 2.1 crore to Corporation Bank, Bank of India and Union Bank of India in addition to SBI. Corporation Bank had around 2 per cent in MCX.