RBI, BoE ink MoU on CCIL, clear decks for bond trade
Clearing Corp of India (CCIL), paving the decks for billions of dollars of trade in Indian sovereign bonds routed through London lenders that needed a mutually beneficial deal to commit personal funds and effectively discharge their custodian role.
The MoU between the Reserve Bank of India (RBI) and the Bank of England (BoE), while acting as an actionable template for other regulatory regimes uncertain about oversight rights over CCIL, also helps establish a framework robust enough to accommodate the potential $25 billion in incremental inflows Indian sovereign bonds are likely to receive by mid-2025 after their inclusion in JPMorgan's keenly tracked global index.
Relief for UK Banks in India
«The MoU establishes a framework for the BoE to place reliance on RBI's regulatory and supervisory activities while safeguarding UK's financial stability,» the RBI said in a statement Friday. «The MoU also demonstrates the importance of cross-border cooperation to facilitate international clearing activities and the BoE's commitment to deference to other regulators' regimes.»
ET had reported on November 28 that the RBI and UK regulators had made significant progress on a new MoU for the treatment of the CCIL and that the BoE would likely communicate a «hands-off» approach on potentially contentious issues, such as rights of audit over the Indian clearing house.
Investor & Custodian
The move is a relief to UK-based banks Standard Chartered, Barclays and HSBC, which are themselves large players in the domestic bond and derivatives markets and are also custodians of foreign investment flows into India.
