HomeCirculars › RBI/2010-11/249

IPC Clause Deadline Extended for Custodian Banks

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2010-11/249 · issued 28 Oct 2010 · ~1 min read
Quick answerRBI extends deadline for custodian banks to include inalienable right clause in client agreements for IPCs to December 31, 2010. Pre-funded transactions are exempt from this clause requirement.

What changed

Custodian banks now have until December 31, 2010, to incorporate a clause in client agreements granting them an inalienable right over securities to be received as payout, extended from the earlier requirement to comply before November 1, 2010. Additionally, transactions that are pre-funded—where clear INR funds are in the customer's account or, for FX deals, the bank's nostro account is credited before IPC issuance—are exempt from this clause requirement.

What it means for you

Banks issuing IPCs to stock exchanges for mutual funds and FIIs get more time to comply with risk mitigation measures, easing operational pressure. The exemption for pre-funded deals reduces compliance burden for transactions where funds are already secured, allowing smoother settlement processes.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

Custodian banks, Scheduled commercial banks (excluding RRBs)

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new deadline for including the inalienable right clause in client agreements?

The deadline has been extended to December 31, 2010, from the original November 1, 2010.

Are there any transactions exempt from this clause requirement?

Yes, pre-funded transactions—where clear INR funds are in the customer's account or, for FX deals, the bank's nostro account is credited before IPC issuance—are exempt.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1597: DBOD.Dir.BC.52/13.03.00/2010-11 — "Banks' Exposure to Capital Market - Issue of Irrevocable Payment Commitments (IPCs)" dated October 28, 2010”
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/249 DBOD.Dir.BC.52 /13.03.00/2010-11 October 28, 2010 All Scheduled Commercial Banks (excluding RRBs) Dear Sir / Madam Banks' Exposure to Capital Market - Issue of Irrevocable Payment Commitments (IPCs) Please refer to our circular No. DBOD.Dir.BC.46/13.03.00/2010-11 dated September 30, 2010 in terms of which certain risk mitigation measures were prescribed in the context of banks issuing IPCs to various Stock Exchanges on behalf of Mutual Funds and FIIs, as a transitionary arrangement upto October 31, 2011. 2. Custodian banks have expressed operational difficulties in complying with the requirement of incorporating a clause in the agreement with their clients which gives them an inalienable right over the securities to be received as payout in any settlement before November 1, 2010.  Accordingly, it has been decided to grant an additional period of two months i.e. upto December 31, 2010, to the custodian banks to fulfil this requirement. 3.  It is also clarified that in cases where transactions are pre-funded i.e. there are clear INR funds in the customer’s account and, in case of FX deals, the bank’s nostro account has been credited before the issuance of the IPC by custodian banks, the requirement of the clause of inalienable right over the security to be received as payout in the agreement with the clients will not be insisted upon. Yours faithfully, (P. R. Ravi Mohan) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/249 · issued 28 Oct 2010. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6061&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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