Four European Union banks seek RBI nod for clearing model
European banks, which also play key custodian roles in the local sovereign debt trade, have sought the Reserve Bank of India's (RBI) go-ahead for a third-party transaction model to break the impasse involving their home authorities and domestic policymakers over audit oversight rights.
«There was a meeting last month between the heads of four European banks and top RBI officials. The banks have sought the RBI's approval on the proposed third-party model because there is no established rulebook for this kind of arrangement,» a source aware of the developments said.
After the meeting, attended by RBI deputy governor T Rabi Sankar, the overseas lenders concerned expect the central bank to communicate its views within the next few weeks, another source said.
The banks in question are Credit Agricole, Societe Generale, Deutsche Bank and BNP Paribas.
Race against October deadline
These Eurozone-based lenders face significant hurdles in carrying out trades in Indian government bonds and derivatives following the decision of the European Securities and Markets Authority (ESMA) to de-recognise the Clearing Corp of India (CCIL) in October 2022.
The ESMA’s step came after the RBI refused to permit rights of audit and inspection over the CCIL, which houses the local platform for government bond trading and provides guaranteed settlement.
European banks now have a deadline of October 2024 to stop transacting with the CCIL — the reason for putting together an alternative third-party clearing mechanism.
An email to the RBI
