BANKS’ EXPOSURE TO COMMODITY MARKETS – MARGIN REQUIREMENTS

Banks while issuing guarantees on behalf of share and stock brokers in favour of stock exchanges in lieu of margin requirements as per stock exchange regulations should obtain a minimum margin of 50 percent. A minimum cash margin of 25 percent (within the above margin of 50 percent) should be maintained in respect of such guarantees issued by banks. It has been clarified that the above minimum margin will also apply to guarantees issued by banks on behalf of commodity brokers.