OTC Corporate Bond Settlement Moves to DvP-I via Clearing Corps
Current · Source: Reserve Bank of India · RBI/2009-10/184 · issued 16 Oct 2009 · ~1 min read
Quick answerFrom Dec 1, 2009, all OTC corporate bond trades must settle through NSCCL or ICCL on a DvP-I basis using RTGS. Clearing corporations will use transitory pooling accounts at RBI to ensure trade-by-trade settlement, reducing counterparty risk.
The rule, in the simplest words
From Dec 1, 2009 every over‑the‑counter (OTC) corporate bond trade must go through the clearing houses NSCCL or ICCL.
Each trade must settle on a DvP‑I basis (delivery versus payment – the bond and the money are exchanged one‑for‑one, trade by trade).
The clearing houses can open temporary (transitory) pooling accounts at the RBI so banks can move money instantly using RTGS (real‑time gross settlement).
Banks must send the buyer’s funds through RTGS to the clearing house’s pooling account for each trade, and update their systems to follow the new DvP‑I rules.
How it plays out — a real example
Rohit Mehta, senior treasury officer at Bank of Baroda in Mumbai, receives a request to buy a corporate bond. He logs the trade in the bank’s system, then uses RTGS to transfer the buyer’s money to the NSCCL transitory pooling account at the RBI. NSCCL confirms receipt and simultaneously delivers the bond to the buyer, completing the DvP‑I settlement. Rohit feels confident that the trade is settled instantly and safely.
What changed
RBI mandated that all OTC corporate bond trades be cleared and settled through NSCCL or ICCL, effective December 1, 2009. These clearing corporations can now open transitory pooling accounts at RBI to facilitate real-time gross settlement (RTGS) on a DvP-I (delivery versus payment) basis, meaning each trade settles individually.
What it means for you
Banks and other regulated entities must route all OTC corporate bond transactions through the designated clearing corporations, ensuring settlement risk is minimized via DvP-I. This shift from bilateral settlement to a centralized, real-time mechanism enhances transparency and reduces default risk for lenders and investors.
What you must do
Ensure all OTC corporate bond trades are cleared and settled through NSCCL or ICCL from December 1, 2009.
Coordinate with your bank's treasury to use RTGS for fund transfers to the clearing corporation's transitory pooling account for each trade.
Update internal systems and processes to comply with the DvP-I settlement mechanism and norms issued by NSCCL/ICCL.
Who it affects
All RBI-regulated entities dealing in corporate bonds, Treasury departments of banks, Clearing corporations (NSCCL and ICCL), Corporate bond market participants
❓ Common questions
Regulatory timeline
Stated effective dateeffective December 1, 2009
Decoded by BankPulse2026-06-19 08:31 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is DvP-I settlement?
DvP-I stands for delivery versus payment on a trade-by-trade basis. It ensures that the transfer of securities happens simultaneously with the payment, reducing settlement risk.
Which clearing corporations are involved?
The National Securities Clearing Corporation Limited (NSCCL) for NSE and the Indian Clearing Corporation Limited (ICCL) for BSE have been permitted to open transitory pooling accounts at RBI for this purpose.
When does this mandate take effect?
The requirement applies to all OTC corporate bond trades from December 1, 2009.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/184
IDMD No.1764 /11.08.38/2009-10
October 16, 2009
To All RBI Regulated Entities
Dear Sir,
Settlement of OTC transactions in corporate bonds on DvP-I basis
Please refer to Paragraph 106 of the Annual Policy Statement of 2009-10 announcing the decision to allow the Clearing Corporations of the exchanges to open transitory pooling account facility with the Reserve Bank for facilitating settlement of OTC corporate bond transactions in real-time gross settlement system (RTGS) on DvP-I basis ( i.e. , on a trade-by-trade basis).
2. In pursuance thereto, the clearing house of the National Stock Exchange (NSE), i.e., the National Securities Clearing Corporation Limited (NSCCL) and the clearing house of the Bombay Stock Exchange (BSE), i.e., Indian Clearing Corporation Limited (ICCL) have been permitted to open transitory pooling accounts with the Reserve Bank of India, Mumbai to which, the buyer of the securities will transfer funds through his bank under RTGS to settle OTC trades in corporate bonds on a DvP-I basis. Under the proposed settlement mechanism, it will be the responsibility of the NSCCL/ICCL to ensure DvP-I.
3. All OTC trades in corporate bonds shall necessarily be cleared and settled through the NSCCL or ICCL under the above arrangement, as per the norms specified by the NSCCL and the ICCL from time to time, with effect from December 01, 2009.
Yours faithfully,
( K V Rajan )
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/184 · issued 16 Oct 2009. The plain-English explanation above is BankPulse’s own independent summary.
Coordinate with your bank's treasury to use RTGS for fund transfers to the clearing corporation's transitory pooling account for each trade.
Update internal systems and processes to comply with the DvP-I settlement mechanism and norms issued by NSCCL/ICCL.
📜 Compliance
Ensure all OTC corporate bond trades are cleared and settled through NSCCL or ICCL from December 1, 2009.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All RBI-regulated entities dealing in corporate bonds, Treasury departments of banks, Clearing corporations (NSCCL and ICCL), Corporate bond market participants), your first concrete step on “OTC Corporate Bond Settlement Moves to DvP-I via Clearing Corps” is: “Ensure all OTC corporate bond trades are cleared and settled through NSCCL or ICCL from December 1, 2009.” (RBI issued this 16 Oct 2009).
Circular: RBI/2009-10/184 -- OTC Corporate Bond Settlement Moves to DvP-I via Clearing Corps
Issued: 16 Oct 2009
Action required: Ensure all OTC corporate bond trades are cleared and settled through NSCCL or ICCL from December 1, 2009.
Action required: Coordinate with your bank's treasury to use RTGS for fund transfers to the clearing corporation's transitory pooling account for each trade.
Action required: Update internal systems and processes to comply with the DvP-I settlement mechanism and norms issued by NSCCL/ICCL.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5314&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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