Banks™ Exposures to Central Counterparties

RBI/2012-13/
DBOD.No.BP.BC. /21.06.201/2012-13

January 10, 2013

The Chairman and Managing Directors/
Chief Executives Officers of
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)

Dear Sir,

Draft Guidelines on Capital requirements for bank exposures to central counterparties

Please refer to the paragraph 88 (extract enclosed) of the Second Quarter Review of Monetary Policy Statement 2012-13 announced on October 30, 2012. It was indicated that the draft guidelines on capital requirements for bank exposures to central counterparties, based on the interim framework of the Basel Committee on Banking Supervision (BCBS), will be issued by mid-November 2012.

2. In this context, a reference is also invited to the circular DBOD.No.BP.BC.98/21.06.201/2011-12 dated May 2, 2012 on implementation of Basel III capital regulations. It was indicated threin that Capitalisation of Bank Exposures to Central Counterparties is engaging the attention of the Basel Committee and the final proposals of the Basel Committee were not available by then. BCBS has now finalised its interim proposal on the issue.

3. Based on the interim framework of the BCBS, draft guidelines are prepared on capital requirements for banks exposures to central counterparties are in the Annex. Banks may offer their comments / feedback on the various proposals enumerated therein latest by January 31, 2013 to the Chief General Manager-in-Charge, Reserve Bank of India, Department of Banking Operations and Development, Central Office, 12th Floor, Central Office Building, Shahid Bhagat Singh Marg, Fort, Mumbai- 400 001 or by e-mail.

Yours faithfully,

(Deepak Singhal)
Chief General Manager-in-Charge

Encl: as above

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Extract of Paragraph 88 of Second Quarter Review of Monetary
Policy for 2012-13

Banks™ Exposures to Central Counterparties (CCP)

88. The BCBS has also issued an interim framework for determining capital requirements for bank exposures to CCPs. This framework is being introduced as an amendment to the existing Basel II capital adequacy framework and is intended to create incentives to increase the use of CCPs. These standards will come into effect on January 1, 2013. Accordingly, it has been decided:

• to issue draft guidelines on capital requirements for bank exposures to central counterparties, based on the interim framework of the BCBS, by mid-November 2012.