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Indian Banks fear fallout of ESMA rift on markets
December 09, 2022
Several banks, together with business our bodies representing cash and foreign money market sellers, met on Wednesday to focus on the possible fallout on monetary markets if the RBI and the European Securities and Markets Authority (ESMA) fail to type out their disagreement.
ESMA has disqualified key Indian establishments which act as central counterparties (CCPs) with the Indian regulators, significantly RBI, refusing to settle for their demand to examine the CCPs just like the Clearing Corporation of India (CCIL).
“Till now, only the European banks have pursued the matter with the RBI. Now, the banking industry is planning to take up the issue with the regulator. The European banks are active participants and there would be disruption if they are unable to deal in forex forwards, government bonds and interest rate swaps. This would impact local banks as well… So the issue is no longer confined to European banks,” a banker conscious of the discussions instructed ET. “We understand and appreciate RBI’s view that ESMA’s demand is ‘extra-territorial’, but a solution has to be found,” mentioned one other one who attended the assembly.
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