India to become netting friendly on bankruptcy law reform

Reserve Bank of India

India is set to introduce a new bankruptcy regime that should eventually enable dealers to net their exposures on over-the-counter derivative trades and therefore gain more favourable Basel III capital treatment for deals struck in the subcontinent.

Although under the Companies Act, bilateral netting is permissible for private banks in the event of liquidation, legislation governing public banks is more ambiguous, which is why the Reserve Bank of India (RBI) prefers to discourage netting across

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