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Parliament passes Bilateral Netting of Qualified Financial Contracts Bill

Finance Minister Nirmala Sitharaman termed the Bill as critical for financial stability in the country, and said it brings in a firm legal basis for bilateral netting for two counter parties

twitter-logoPTI | September 23, 2020 | Updated 14:16 IST
Parliament clears Bill on bilateral netting of qualified financial contracts
Lok Sabha had passed the bill on Sunday

Parliament on Wednesday passed a Bill that seeks to provide a legal framework for bilateral netting of qualified financial contracts. Lok Sabha had passed the bill on Sunday. The legislation allows for enforcement of netting for qualified financial contracts.

Finance Minister Nirmala Sitharaman termed the Bill as critical for financial stability in the country, and said it brings in a firm legal basis for bilateral netting for two counter parties.

Sitharaman said: "It is just the bilateral contracts which do not have any firm legal basis. Value of bilateral derivative contracts is estimated by Clearing Corporation of India to be Rs. 56,33,257 crore as of March 2018."

Bilateral contracts constitute 40 per cent of total financial contracts while multilateral contracts constitute 60 per cent, she added.

Also read: Parliament Session: Bill to amend Foreign Contribution (Regulation) Act passed in Rajya Sabha

Also read: Rajya Sabha passes bill to bring cooperative banks under RBI's ambit

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