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Market authorities logjam: RBI governor says European regulators need to trust India’s strength

The governor of the Reserve Bank of India said that regulations in India are strong. (File)

Mumbai:

India is very different today than it was in the past and the developed world needs to rely on the credibility and strength of local regulators, Reserve Bank of India Governor Shaktikanta Das said today.

In comments made in the wake of derecognition of Indian clearing houses by the European Securities and Markets Authority (ESMA) and the UK, Shaktikanta Das said the Indian market infrastructure complies with all international standards.

“I think, on the other hand it is necessary for the regulators to appreciate the credibility as well, they should trust the credibility and strength of the Indian regulations. That is what we are trying to impress upon them,” Shaktikanta Das told reporters here.

The Governor said that India is different from 20-30 years back and the rules are stronger here.

It may be noted that recently, ESMA announced that it would stop recognizing six major clearing houses from April 1 next year, following a similar move by the Bank of England.

According to experts, such moves are likely to be disruptive as European lenders will be forced to put up higher capital if they wish to continue dealing with unaccredited entities.

RBI Deputy Governor T Rabi Shankar, who had earlier termed the European regulators’ move as an ‘unfortunate intervention’, today told that discussions are on in the matter and the Reserve Bank of India hopes to reach an understanding.

T Rabi Shankar said, “The fundamental point of divergence is the fact that an Indian entity which does not operate in the EU and operates entirely in India is subject to regulation by an EU regulator. Good for too.” said without disclosing any exact details.

He said that once the fundamental point of disagreement is agreed upon, we will be able to sort out the details.

Shaktikanta Das also said that RBI is hopeful of resolving the issue.

The DG cited the case of Japan, which reached an agreement with India after assessing that the Indian financial scenario was “fairly sound”.

However, he also said that if any glitches happen due to these steps, the RBI is fully prepared to deal with it.

“We fully comply with the guidelines of CPMI (Committee on Payment and Market Infrastructure) under the aegis of Basel framework. And, we follow all CPMI standards. We follow all international standards. Our market infrastructure The structure is very strong,” said Shaktikanta Das.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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