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RBI, Bank of England sign MoU for cooperation in CCIL issue

  • Category
    International Relations
  • Published
    9th Dec, 2023

Context

Memorandum of understanding on cooperation and exchange of information related to Clearing Corporation of India Ltd (CCIL) has been signed

Background

The Reserve Bank of India (RBI) and the Bank of England (BoE) recently inked a memorandum of understanding (MoU) centered on cooperation and information exchange concerning the Clearing Corporation of India Ltd (CCIL).

CCIL's Role:

  • CCIL is a central counterparty (CCP), is crucial for clearing and settlement in transactions related to government securities, foreign exchange, and money markets in India.
  • The regulatory oversight for CCIL falls under the purview of the RBI.

Framework for Cooperation

  • The signed MoU establishes a framework wherein the BoE relies on the RBI's regulatory and supervisory activities while ensuring the stability of the UK's financial system.
  • The agreement underscores the importance of cross-border collaboration for international clearing activities.
  • CCIL's Recognition Process:
    • In January, CCIL applied to the Bank of England for recognition as a third-country Central Counterparty (TC-CCP).
    • The MoU facilitates the BoE's assessment of CCIL's application, a prerequisite for UK-based banks to engage in transactions through CCIL.

Implications for UK-Based Lenders:

  • The agreement brings relief to UK-based lenders, including Barclays and Standard Chartered, allowing them to continue providing clearing and settlement services to clients in India.

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