New Delhi, Sep 23 : Parliament on Wednesday passed the Bilateral Netting of Qualified Financial Contracts Bill, 2020 which allows for enforcement of netting for qualified financial contracts after the Rajya Sabha cleared it by a voice vote.
The Bill will be returned to the Lok Sabha.
Replying to the debate on the Bill, Finance Minister Nirmala Sitharaman said that the Bill was “absolutely critical for financial stability in the country” as it seeks to bring in a firm legal basis for bilateral netting for two counterparties.
Responding after a brief discussion on the bill in the absence of the Opposition, she said the Bill was provided for a strong legal basis for bilateral netting between two parties.
She told the members that the legislation would help in making an actual risk assessment in gross terms rather than a notional risk assessment by empowering regulatory authorities as it provided a buoyant credit market.
Stating that Parliament’s seal on bilateral netting bill was important for financial stability in the country,
the Minister said the Bill had been brought in keeping with the various lessons learnt from the 2008 global financial crisis.
“Had this Bill been brought before then, in the year 2017, an amount of Rs 42,194 crore would have been available to lend in banks. In 2018, the amount would have been Rs 45,956 crore, in 2019 the amount would have been Rs 67,719 crore available.
In March 2020, this amount was Rs 58,308 crore but it could not be used because there was no law for bilateral netting.”