RBI, Irdai not inclined to allow investments in commodity derivatives: Sebi
Mumbai, May 4, 2026
Sebi chairman Tuhin Kanta Pandey said banking and insurance regulators have valid concerns, while the market regulator plans an advisory on risks from AI-led models like Mythos
The Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (Irdai) are not in favour of allowing banks and insurance companies to participate in the commodity derivatives market, Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi), said on Monday.
Pandey said that the regulators of banks and insurance companies have a ‘valid rationale’ for not being favourably inclined towards the segment.
The chairman added, “They had their rationale that at this moment, they do not feel it is the right time because these are long term—the insurance is long term—so how will the commodity derivatives help.”
He added that the market regulator did not get a positive response from the other regulators during engagement because of ‘certain concerns’.
Pandey was speaking on the sidelines of the IMC Capital Markets Conference at NSE.
On other issues of the commodity market, the Sebi chairman said that they have sent a proposal to the government on problem areas, particularly on taxes and Goods and Services Tax (GST).
“We have proposed that there could be an Integrated GST mechanism instead of the State GST. For delivery, the warehousing could be located in various places due to which they may have to take registration from all the states for the purpose of delivery. It is really cumbersome,” said Pandey.
Commodity segment involves physical delivery, which may involve delivery from warehouses located in different states, leading to complexities in tax treatment. Experts said IGST could ease compliance and processes for participants.
The Sebi chairman also highlighted that the regulator was aware of the challenges that Mythos and similar AI models bring, testing market resilience.
While adding that the regulator was in touch with market participants and stakeholders on these issues, Pandey said, “Sebi will soon issue an initial advisory on risks emanating from such models and AI-led vulnerability detection tools.”
Pandey further cautioned that in an interconnected securities market, a single weak link can create wider risks and that regulated entities have to stay ahead of such risks through stronger cyber resilience and continuous monitoring.
“Algorithms may move faster than human controls. Digital platforms may become channels for fraud. This is especially relevant as next-generation AI models become more powerful. While these tools can help identify weaknesses faster, they can also exploit vulnerabilities at speed and scale,” he added.
On queries on enabling CKYC 2.0—one KYC across the financial system, the Sebi chairman said, “The CKYC 2.0 is now under preparation. The CERSAI is doing it and we are all contributing to it. We had a meeting last week with CERSAI for identifying all the different points which need to be addressed. We may have something by end-July.”
CERSAI is the Central Registry of Securitisation Asset Reconstruction and Security Interest of India.
He further highlighted the need to address issues around the lack of clarity on authentication of data in the pool.
[The Business Standard]
