REGULATORS IN EUROPE NEED TO TRUST INDIA: DAS

MUMBAI: The Reserve Bank of India is trying to convince European regulators to “trust the credibility and strength” of Indian regulations amid the ongoing dispute over the disqualification of Indian clearing houses, said governor Shaktikanta Das.

Speaking to reporters at the post monetary policy conference on Wednesday, Das said India has changed, and it is currently very different from what it was earlier.

“Our regulations today are very robust. In fact, we are fully compliant with the CPMI (Committee on Payments and Market Infrastructures) guidelines under the aegis of the Basel framework. And we comply with all the international standards. Our market infrastructure is very robust,” he said in response to a question.

“I think it is also necessary for regulators on the other side to appreciate the credibility…they must trust the credibility and strength of the Indian regulations. That is what we are trying to impress upon them. It is under discussion, and we are hopeful of a resolution,” Das said.

The governor’s comments follow the European Securities and Markets Authority’s (ESMA) announcement that it will derecognize six Indian clearing houses effective May 1, as Indian regulators have not signed revised cooperation agreements. These clearing houses are Clearing Corporation of India, Indian Clearing Corporation Ltd, NSE Clearing Ltd, Multi Commodity Exchange Clearing, India International Clearing Corporation (IFSC) Ltd, and NSE IFSC Clearing Corporation Ltd.

According to bankers, this move will impact European banks’ ability to settle trades and conduct treasury operations in India as they will have to set aside higher capital to route the transactions outside of the clearing houses. Among the banks impacted by the ESMA directive include Deutsche Bank, Credit Agricole, BNP Paribas and Credit Suisse.