FCRA bill gets Cabinet approval

The Union Cabinet has cleared the Forward Contract Regulations Amendment (FCRA) Bill, giving a reform boost to the commodity futures market. The Bill will provide more autonomy and power to the Forward Markets Commission (FMC) to regulate the commodity markets effectively.

The FCRA Bill, 2010 was introduced in the Lok Sabha in December 2010 and was referred to the Parliamentary Standing Committee that had recommended some changes. In the present Amendment bill all the recommendations have been incorporated.

It will provide financial autonomy to FMC by allowing it to levy fee for generating revenue and hire professionals to strengthen human resource and research capabilities. The Bill will also pave way for introduction of products such as options in commodity derivatives, helping the stakeholders including farmers to take advantage of the price discovery mechanism. It would also make possible the entry of institutional investors.

The retirement age of FMC Chairman and its members will go up to 65 years from 60 years, if Parliament passes the Bill. The Bill also allows setting up of an Appelate Authority to guard against arbitrary regulatory decisions, introduction of products like option and weather/rainfall derivatives and penalty hike on defaulters to Rs 50 lakh from the existing Rs 25 lakh.