Date:10/05/2005 URL: http://www.thehindubusinessline.com/2005/05/10/stories/2005051001001000.htm

Back Karur Vysya Bank in pact to be co-promoter in NCDEX arm

L. N. Revathy

The National Collateral Management Services Ltd (NCMSL) Chief Executive Officer and Managing Director, Mr A. Hari Prasad (left) and the Karur Vysya Bank Chairman, Mr P.T. Kuppuswamy, signing an agreement under which the bank will be a co-promoter of NCMSL.

Karur , May 9

KARUR Vysya Bank Ltd (KVB) has been roped in as a co-promoter of National Collateral Management Services Ltd (NCMSL), a sister concern of the National Commodity and Derivates Exchange/ NCDEX. (KVB is also the clearing banker for NCDEX.)

The company , which is also promoted by Punjab National Bank, Canara Bank, Corporation Bank, Bank of India, HDFC, Yes Bank, KVB and Indian Farmers Fertiliser Co-operative Ltd, aims to serve the farming community.

The KVB Chairman, Mr P.T. Kuppusamy, said: "We have been the clearing banker of NCDEX for the last four to five months.

Advancing against warehouse receipts is not a new line of business for us. So, when the NCMSL proposal came up, we were too happy to invest in the venture," he told Business Line.

KVB has invested Rs 3 crore towards the share capital of NCMSL.

The agreement was signed in Mumbai last week. Mr Kuppusamy pointed out that the bank had been advancing against warehouse receipts without proper appraisal of the quality or rating of the produce.

"Under the new system, the banker's position is secured with a forward contract. Advances against warehouse receipts will no longer be a balance sheet risk for the banker. The company will help the farmer discover the price of the produce," he explained.

KVB has advanced over Rs 150 crore last fiscal against warehouse receipts.

He said NCMSL plans to have warehouses throughout the country as well as a technical team to assess the quality and value of the produce brought to the warehouses.

"The warehouse management services company plans to construct godowns across 150 centres very soon. It has taken on lease/rent warehouses across 43 centres in the country," Mr Kuppusamy said.

"Though we have established our position in the South, this agreement with NCMSL will make our entry into up-country centres hassle-free."