RBI puts onus on EU Banks to resolve stalemate with ESMA

Reserve Bank of India (RBI) has put the onus on European Union banks to resolve the stalemate caused by the European Securities & Markets Authority’s (ESMA) decision to disqualify key Indian institutions which act as central counterparties (CCPs) in securities, money market, and forex transactions.

This was conveyed at a meeting between senior officials of the MNC banks and RBI deputy governor T Rabi Sankar on November 11, multiple sources told ET.

“RBI’s stand is clear. The new rules which have become a bone of contention were not introduced by RBI. They did not originate in India but have emanated from jurisdictions and countries where these MNC banks are headquartered,” said an official of a large European bank.

“So, the foreign banks should sort out (the matter) with their respective regulators and authorities to find a way out,” said the official.

“RBI is expected to hold more meetings on the subject,” said another banker.

According to banking circles, as of now it is evident that RBI is not comfortable with the dual regulatory arrangement; and under the circumstances European banks in India would have to think of a plan B to carry out their regular treasury operations.