RBI/2013-14/430
DBOD.No.BP.BC.82/21.06.217/2013-14
The Chairman and Managing Director/
Chief Executive Officer of
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Dear Sir / Madam,
DBOD.No.BP.BC.82/21.06.217/2013-14
January 7, 2014
The Chairman and Managing Director/
Chief Executive Officer of
All Scheduled Commercial Banks
(Excluding Regional Rural Banks)
Dear Sir / Madam,
Banks’ Exposure to Central Counterparties (CCPs) - Interim Arrangements
In terms of para 2.1.1.1
of the Master Circular on Exposure Norms dated July 1, 2013, the
exposure limit applicable to a single counterparty of a bank is 15 per
cent of its capital funds.
2. The recent financial crisis has highlighted the need to
promote a central clearing of standardized over-the-counter (OTC)
derivative products through a Central Counterparty (CCP). It has,
therefore, been decided that as an interim measure, a bank’s clearing
exposure to a Qualifying CCP (QCCP) will be kept outside of the exposure
ceiling of 15 per cent of its capital funds applicable to a single
counterparty. Clearing exposure would include trade exposure and
default fund exposure as defined in the guidelines on capital
requirements for banks’ exposure to central counterparties issued vide Circular DBOD.No.BC.28/21.06.201/ 2013-14 dated July 2, 2013.
Other exposures to QCCPs such as loans, credit lines, investments in
the capital of CCP, liquidity facilities, etc. will continue to be
within the existing exposure ceiling of 15 per cent of capital funds to
a single counterparty. However, all exposures of a bank to a non-QCCP
should be within this exposure ceiling of 15 per cent.
