Why are banks and insurance companies in India not allowed to invest in commodity derivatives, according to SEBI?

According to SEBI Chairman Tuhin Kanta Pandey, the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI) are 'not inclined to allow' banks and insurance companies to invest in commodity derivatives. This stance was stated explicitly on Monday and reflects the current regulatory position of these two key financial sector regulators, despite SEBI's own September announcement that it would engage with the government to enable such investments by banks and pension funds as part of its agenda to strengthen commodities markets.

What did SEBI announce regarding pension funds and commodity derivatives, and what remains unclear?

SEBI Chairman Tuhin Kanta Pandey stated that India's pension fund regulator had 'also looked at allowing pension funds to invest in commodity derivatives', but he 'did not disclose whether it had made a decision'. This indicates that while consideration has been given to permitting pension fund participation in commodity derivatives, no official decision or public confirmation has been issued, leaving the status of such investments for pension funds uncertain.

India's Bank, Insurance Regulators Not Inclined to Allow Commodity Derivative Investments, SEBI Says

May 3, 2026

SEBI Chairman announced that Indian banks and insurers will not be allowed to invest in commodity derivatives, causing MCX shares to fall 3.4%. This decision halts previous plans to broaden institutional participation in strengthening commodity markets.

reuters

2026-05-03

India's Bank, Insurance Regulators Not Inclined to Allow Commodity Derivative Investments, SEBI Says

India's Bank, Insurance Regulators Not Inclined to Allow Commodity Derivative Investments, SEBI Says

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