MANU/RMIC/0034/2021

Ministry : Reserve Bank of India

Department/Board : Department of Regulation

Circular No. : DOR.CAP.51/21.06.201/2020-2021
                   RBI/2020-2021/115

Date : 30.03.2021

Notification/ Circulars Referred : Notification No. S.O. 3463(E) dated October 1, 2020 MANU/EAFF/0060/2020;Notification no. FMRD.DIRD.2/14.03.043/2020-21 dated March 9, 2021 MANU/RMIC/0027/2021;Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 MANU/RMIC/0291/2015;Circular DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 MANU/RMIC/0028/2018;Master Circular DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 MANU/RMIC/0294/2015;Master Circular DBR.No.BP.BC.4./21.06.001/2015-16 dated July 1, 2015 MANU/RMIC/0292/2015

Citing Reference:
Notification No. S.O. 3463(E) dated October 1, 2020 MANU/EAFF/0060/2020  Referred

Notification no. FMRD.DIRD.2/14.03.043/2020-21 dated March 9, 2021 MANU/RMIC/0027/2021  Referred

Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 MANU/RMIC/0291/2015  Referred

Circular DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 MANU/RMIC/0028/2018  Referred

Master Circular DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 MANU/RMIC/0294/2015  Referred

Master Circular DBR.No.BP.BC.4./21.06.001/2015-16 dated July 1, 2015 MANU/RMIC/0292/2015  Referred

All Scheduled Commercial Banks
(excluding Regional Rural Banks)

Dear Sir,

Bilateral Netting of Qualified Financial Contracts- Amendments to Prudential Guidelines

The Bilateral Netting of Qualified Financial Contracts Act, 2020 (hereafter referred to as "the Act"), has been notified by the Government of India vide Gazette Notification No. S.O. 3463(E) dated October 1, 2020. The Act provides a legal framework for enforceability of bilateral netting of qualified financial contracts (QFC).

2. In exercise of the powers conferred by section 4(a) of the Act, the Reserve Bank, vide Notification no. FMRD.DIRD.2/14.03.043/2020-21 dated March 9, 2021, has since notified (a) "derivatives"; and (b) "repo" and "reverse repo" transactions as defined under Section 45(U) of Chapter III-D of the Reserve Bank of India Act, 1934 as a QFC.

3. Accordingly, select instructions contained in the following circulars have been modified/amended appropriately:

a) Master Circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on 'Basel III Capital Regulations' as provided in Annex 1;

b) Circular DBR.BP.BC.No.106/21.04.098/2017-18 dated May 17, 2018 on 'Basel III Framework on Liquidity Standards - Net Stable Funding Ratio (NSFR) - Final Guidelines' as provided in Annex 2;

c) Master Circular DBR.No.BP.BC.2/21.04.048/2015-16 dated July 1, 2015 on 'Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances' as provided in Annex 3; and

d) Master Circular DBR.No.BP.BC.4./21.06.001/2015-16 dated July 1, 2015 on Prudential Guidelines on Capital Adequacy and Market Discipline-New Capital Adequacy Framework (NCAF) as provided in Annex 4.

The revised instructions come into force with immediate effect.

Yours faithfully,
(Usha Janakiraman)
Chief General Manager