Credit Risk Mitigation (CRM) for offsetting – non-centrally cleared derivative transactions of foreign bank branches in India with their Head Office

RBI vide Notification No. RBI/2021-22/97
dated 9th September, 2021 has issued
notification for offsetting non-centrally
cleared derivative transactions of
foreign bank branches in India with
their Head Office under CRM.
The Indian branches of foreign banks
shall be permitted to reckon cash/
unencumbered approved securities,
the source of which is interest-free
funds from Head Office or remittable
surplus retained in Indian books
(reserves), held with RBI as CRM, for
offsetting the gross exposure of the
foreign bank branches in India to the
Head Office (including overseas
branches) for the calculation of LEF(
Large Exposure Framework) limit,
subject to the following conditions:
i. The amount so held shall be over
and above the other regulatory and
statutory requirements and shall be
certified by the statutory auditors.
ii. The amount so held shall not be
included in regulatory capital.
iii. The bank shall furnish an undertaking
as on March 31st every year to the
Department of Supervision (DoS), RBI
that the balance reckoned as CRM
for the purpose will be maintained
on a continuous basis.

https://www.rbi.org.in/Scripts/NotificationUs
er.aspx?Id=12160&Mode=0

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