A banking company proposes to acquire paddy in bulk from farmers, store it in godowns and sell it to millers at a profit, using its own funds, staff and premises for the activity. Under the Banking Regulation Act, 1949, which of the following is the correct position regarding this proposal?

Section 8 of the Banking Regulation Act, 1949 provides that no banking company shall directly or indirectly deal in the buying or selling or bartering of goods, except in connection with the realisation of security given to or held by it. The forms of business enumerated in Section 6(1) do not include trading in commodities, and such trading would expose bank funds to speculative risk of the kind that banking regulation seeks to avoid. Merely relying on the Reserve Bank's approval or routing the trade through a subsidiary does not cure the prohibition, since the bar expressly extends to indirect dealing as well. Realisation of a security interest, by contrast, is expressly saved, but a standing business of buying and selling commodities for profit falls squarely within the prohibition.