SEBI has issued Consultation paper on Prudential norms for exposure of Clearing Corporations with the objective to mitigate the concentration risk or exposure of Clearing Corporations (CCs)to various entities through stipulation of prudential norms. For the purpose of monitoring of exposure, CCs are proposed to, inter-alia, consider the following types of exposures:
- CCs’ own funds invested or deployed with banks;
- Core Settlement Guarantee Fund (SGF) corpus invested or deployed with banks;
- CCs’ balances with the bank in its capacity as a clearing bank;
- FDsand BGs lien marked to CCs;
- Equity shares pledged or re-pledged with CCs;
Page Debt instruments pledged or re-pledged with CCs.
- Mutual fund units pledged or re-pledged with CCs;
- CCs’ similar exposure through their subsidiaries.
CCs shall have exposure (through Cash, FDs and BGs) to such banks which fulfil the following criteria:
- Minimum net worth of INR 5,000 Cr.;
- Unsupported long-term issuer rating of AA and above or unsupported credit rating of a long-term instrument of AA and above. In case of foreign banks, an equivalent credit rating on the global credit rating scale (equivalent to AA and above rating by domestic Credit Rating Agencies (CRAs)) may be considered by the CCs for assessment of the credit worthiness of the bank; and
- Meet the capital adequacy requirements prescribed by Reserve Bank of India (RBI) from time to time