RBI/2004/230 DIT(CO). 2314/06.15.39/2003-2004, Dt. 05/06/2004

Debiting Clearing Settlement Accounts of member banks towards transactions not related with clearing or on unilateral basis

It is noted with serious concern that despite instructions issued from time to time some clearing houses are not following the accepted procedures relating to the management of the clearing houses. It is being reported frequently that the banks managing clearing houses are unilaterally debiting the clearing settlement account of the clearing house members towards settlement of disputes which are pertaining to clearing settlements by taking undue advantage of maintaining the clearing house member’s account. Even disputes not related to clearing house settlements are also unjustifiably being adjusted unilaterally in the clearing house member’s account by banks managing the clearing houses.

2. The above action is unacceptable and is clearly in gross violation of the Uniform Regulations & Rules for Bankers’ Clearing Houses (URRBCH)-Rule 7 and not in keeping with the spirit of clearing houses being voluntary association of bankers. Banks running the clearing house have a dual role-that of managers as well as that of a member-participants. Disputes that the manager may have as a participant with another participant cannot be unilaterally settled by the manager using its powers as the manager of the clearing house. This status is applicable under all circumstances and irrespective of the nature of dispute.

3. The contents of this letter may be brought to the notice of the clearing houses and its members forthwith.

4. Amounts under dispute debited unilaterally to member bank’s accounts may be reversed immediately under advice to us.

5. Please acknowledge receipt of circular and also confirm having brought the contents of this letter to the notice of all clearing houses being managed by your bank.

Yours faithfully,

Sd/-
(Arun Pasricha)
General Manager

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