ESMA
RBI working on alternate solutions for Indian banks hit by ESMA regulations
Mumbai: The Reserve Bank of India (RBI) is working on alternate solutions if the European markets’ regulator withdraws recognition of the Indian central bank’s counterparties.
European Securities and Markets Authority (ESMA) wants to join RBI to oversee Indian transactions in the region.
RBI opposes the demand as such approval would give ESMA “extra-territorial reach,” it noted in its half-yearly Financial Stability Report published Thursday.
“Such regulations, if implemented by all jurisdictions, can create a parallel maze of laws with overlapping requirements or restrictions and show a lack of trust in the capabilities and quality of oversight exercised by the host regulators,” the report said.
RBI is seeking a middle path—a mutually acceptable arrangement—that respects the territorial sovereignty of the host regulator.
“Remedial measures by way of possible alternate arrangements are under deliberation with the entities likely to be impacted,” it added.
ESMA has threatened to withdraw recognition of six Indian clearing houses, effective May 2023.
In a similar move, Bank of England also warned of removing the recognition of Clearing Corp. of India from July 2023.
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