Rajshree Sugars Filed Case Against Axis Bank
The latest to join is Coimbatore-based Rajshree Sugars and Chemicals when it filed a case against Axis Bank in Madras High Court alleging that the forex derivative product sold to them by the bank did not take care of their needs. The currency involved and the quantum of losses is not known yet. R Varadarajan, chief operating officer of Rajshree told TOI that his company has indeed filed a case around a forex derivative sold to it by Axis. "The matter is subjudice. I cannot comment any further," is all he would say. B Gopalakrishnan, head of the legal at the Bank acknowledged that his client had filed a case. "The case is coming up for hearing in the Madras High Court on March 31," he added. Sundaram Multi Pap had dragged ICICI Bank to courts arguing that the bank sold them a wrong derivative product
Last month, Sundaram Multi Pap had dragged ICICI Bank to courts arguing that the bank sold them a wrong derivative product. The currency in this dispute is the Swiss Franc where the bank asked the company to shore up Rs 6 crore as margin money on a derivative contract. Even a conservatively run Sundaram Brake Linings, part of the TVS group, has pulled up its bankers and dragged them to the courts, once again alleging their bankers have mis-sold derivative products. The monies involved here is not much though. Sundaram Brake said that it has rejected a demand of Rs 1.76 crore from one of the banks saying that the contract was void. Small and medium sized companies are up in arms their bankers.
Many of these companies have been caught on the wrong foot due to the weakening of the US dollar against several currencies including the euro, Swiss franc and Japanese yen in the current fiscal. Sources say as much as Rs 3,000 crore worth derivative instruments were sold in Chennai, Coimbatore and Tirupur. "Many exporters, who are reeling under losses due to rupee appreciation, bought forex derivative products. It's a bet one takes on a currency. When the going is good, they say it was smart treasury operations, but now they are shirking away by blaming banks. It will be interesting to see how the various courts view these cases," an official attached to the forex department of a bank said.
