In a major step towards Financial sector reform, the cabinet likely approves the Bilateral Netting of Qualified Financial Contracts Bill, 2020. The economic survey 2019 -20 advocated for bilateral netting financial contracts, currently, it is not allowed in India which have a negative impact on financial markets and banks in India. The survey defines bilateral netting as “A bilateral netting agreement enables two counterparties in a financial contract to offset claims against each other to determine a single net payment obligation due from one counterparty to the other.” This news is related to the topic Indian economy of GS 3. Details about Bilateral Netting and its advantages is important for both mains and prelims.
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