No specific deadline for agreement between ESMA, RBI, says deputy governor T Rabi Sankar

Reserve Bank of India (RBI) deputy governor T. Rabi Sankar

The Reserve Bank of India’s (RBI) Deputy Governor T Rabi Sankar on November 7 said that there is no specific deadline for the agreement between European Securities and Markets Authority (ESMA) and Indian banking regulator after the deadline has passed last month.

“The issue now is that the deadline two years ago has passed. The country’s regulators of European bank had given them some more time the end of October this year, but they come back and said that you work to ensure that you adhere to ESMA requirements. There is no specific deadline now,” Sankar said during the Business Standard BFSI Insight Summit in Mumbai.

The dispute between Indian banking regulator and ESMA has erupted after the latter in October 2022 de-recognised the Clearing Corporation of India Limited (CCIL), due to a lack of audit and inspection rights over the local clearing house.

This move by the ESMA had created a significant obstacle for European banks, which conduct billions of dollars in bond and swap transactions through the CCIL. The regulators in France and Germany granted a temporary extension until October 2024 for their banks to trade with the CCIL, a long-term solution remains elusive.

Sankar also said that issue in ESMA is not refusing anything to anyone, the issue is we have taken a very consistent stance, ESMA is being extra jurisdictional in telling us how we should do regulations.

“We were willing to accommodate that if they had trusted us as regulator. They are probably constrained by their laws, the law itself is extra jurisdictional. That discussion is going on and there is no way we can agree to that, it is not possible to agree to that without compromising on your sovereignty of policy making,” Sankar said.