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

  • Published
    2nd 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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