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Finance Minister Nirmala Sitharam introduces Bill on bilateral netting, to assist banks

According to the Economic Survey for 2019-20, a bilateral netting agreement allows two counter parties in a financial contract to offset claims against each other to determine a single net payment obligation due from one counter party to the other.According to the Economic Survey for 2019-20, a bilateral netting settlement permits two counter events in a monetary contract to offset claims towards one another to find out a single internet fee obligation due from one counter occasion to the opposite.

Finance Minister Nirmala Sitharaman on Monday launched the Bilateral Netting of Qualified Financial Contracts Bill, which might assist banks launch a portion of their capital locked in such bilateral transactions.

According to the Economic Survey for 2019-20, a bilateral netting settlement permits two counter events in a monetary contract to offset claims towards one another to find out a single internet fee obligation due from one counter occasion to the opposite. So, basically, it permits two events concerned in a swap settlement to net-off their swap positions. Without the bilateral netting provision, Indian banks sometimes have needed to put aside greater capital towards their trades within the over-the-counter market.

Citing the RBI’s estimates, the Survey had stated bilateral netting preparations might have helped 31 main banks taking part in India’s OTC derivatives market save about Rs 2,258 crore in regulatory capital throughout FY 2017-18.

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