Four European banks seek RBI approval for a third-party transaction model

Four European banks seek RBI approval for a third-party transaction model.
Credit Agricole, Societe Generale, Deutsche Bank, and BNP Paribas have asked the Reserve Bank of India (RBI) to approve a third-party transaction model.
They have kept this demand to resolve a deadlock between their home authorities and Indian policymakers over audit oversight rights.
After the European Securities and Markets Authority (ESMA) de-recognized the Clearing Corp of India (CCIL) in October 2022, the European banks faced problems in trading Indian government bonds and derivatives.
ESMA took the decision after the RBI denied it the right to audit and inspect CCIL (which regulates the sale and guarantees settlement of local government bonds).
European banks now need to set up an alternative third-party clearing mechanism because of the deadline of October 2024 to stop transactions with CCIL.
The four European banks are now waiting for either the central bank’s approval for the third-party model or a resolution of the dispute between ESMA and the RBI over audit oversight.