SBI, ICICI may act as third-party liaisons for European banks
State Bank of India and ICICI Bank, two of the country's top three lenders, are likely to act as local intermediaries for European banks seeking a plan for third-party clearing after last month's meeting between top Reserve Bank of India (RBI) officials and those from certain European banks, sources told ET.
The proposal for local banks to carry out third-party clearing for the European banks comes on the back of a decision by the European Securities and Markets Authority (ESMA) in October 2022 to de-recognise the Clearing Corporation of India (CCIL).
ESMA's step came after the RBI refused to permit the foreign body rights of inspection and audit over the CCIL, which hosts the trading platform and provides guaranteed settlement for Indian government bonds and interest rate derivatives. Pending a resolution of the matter, foreign banks have a deadline of October 2024 to stop transacting with the CCIL.
«Broadly, the plan is for SBI and ICICI to perform the third-party clearing role, given that European banks will no longer be able to transact with the CCIL if the October deadline is enforced. They (the RBI) were not too comfortable if it would be only one local bank playing that role,» a source said.
«On the derivatives side, the counterparty remains the CCIL on the counterparty side, but the clearing role would go through SBI and ICICI,» the source said.
An email sent to the RBI seeking comment on the matter did not receive a response by the time of publication. SBI and ICICI Bank did not respond to emailed
