After Axis Bank, it is now the turn of State Bank of India to disclose losses its customers could face on derivative trading.
India’s largest commercial bank today said its clients may suffer a mark-to-market loss of up to Rs 700 crore at the end of March 2008 due to derivative transactions, though the bank is unlikely to take any hit for the moment.
While SBI Chairman OP Bhatt did not disclose the number of derivatives clients it has, he said the bank had not sold any exotic derivative product to its clients.
"All the derivative transactions have underlyings. Products are sold only to regular customers," Bhatt said.
He added that none of the clients had so far gone to court or threatened to do so. Derivatives are financial instruments whose value changes in response to the changes in underlying variables.
Companies enter into derivative contracts like futures, forwards, options, and swaps to hedge their currency and interest rate risks. Private sector players like ICICI Bank, Axis Bank and Kotak Mahindra Bank have been taken to court by their clients over the derivatives products they sold.
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