What changed
The earlier circular (DBOD.Dir.BC.46/13.03.00/2010-11 dated September 30, 2010) had set a transitionary arrangement for IPCs that was to expire on October 31, 2011. RBI has now extended that arrangement by two months, keeping all existing guidelines in force until December 31, 2011.
What it means for you
Banks can continue issuing IPCs to stock exchanges for Mutual Funds and FIIs under the same risk mitigation framework for two more months. This gives banks and market participants additional time to adjust to any future changes in capital market exposure norms.
What you must do
- Continue following the existing IPC guidelines from the September 30, 2010 circular until December 31, 2011.
- Ensure all risk mitigation measures for IPCs issued to stock exchanges remain in place.
- Prepare for potential further regulatory changes after the extended deadline.
- Monitor RBI announcements for any updates beyond December 31, 2011.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Mutual Funds, Foreign Institutional Investors (FIIs), Stock Exchanges
What is an Irrevocable Payment Commitment (IPC)?
An IPC is a bank's guarantee to a stock exchange that payment will be made for securities transactions, typically used by Mutual Funds and FIIs to settle trades.
Why did RBI extend the IPC guidelines?
The extension provides a transitionary period for banks and market participants to continue using the existing risk mitigation framework while RBI reviews or finalizes permanent norms.
Does this circular change any other rules for capital market exposure?
No, this circular only extends the timeline for existing IPC guidelines; no other capital market exposure rules are modified.