Bilateral Netting

The Budget 2020 has proposed bilateral netting.A bilateral netting agreement enables two counterparties in a financial contract to offset claims against each other to determine a single net payment obligation that is due from one counterparty to the other.

  • This means that the pay ables and receivables are netted off.
  • Indian financial contract laws do not permit bilateral netting; however, they do allow multi-lateral netting where parties can offset claims against each other through a central counterparty.
  • Global regulatory bodies such as Financial Stability Board and Basel Committee on Banking Supervision have supported use of such netting. At present, U.S., U.K., Australia,Canada, etc. ....
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