Economics • Banking & FinanceHard
What is the primary role of the 'Clearing Corporation of India Limited (CCIL)' in the Indian financial system?
A. To provide centralized clearing and settlement services for transactions in government securities, foreign exchange, and money markets✓ Correct Answer
B. To regulate non-banking financial companies and microfinance institutions registered across tier-two cities
C. To act as the statutory deposit insurance agency for commercial and cooperative bank accounts in India
D. To formulate monetary policy guidelines and manage foreign exchange reserves on behalf of the central bank
💡 Solution & Explanation
Clearing Corporation of India Limited was set up to provide guaranteed clearing and settlement services for transactions in government securities, foreign exchange, and money markets, mitigating counterparty credit risk. Distractors confuse its role with NBFC regulation, deposit insurance, or monetary policy formulation. By acting as a central counterparty, CCIL absorbs settlement risks and enhances operational efficiency in financial markets. It was promoted by major commercial banks with support from the Reserve Bank of India.
More Economics Banking & Finance questions
- What does the 'Capital to Risk-Weighted Assets Ratio' measure for a commercial bank under Basel norms?
- What is the primary function of the 'Repo Rate' managed by the Reserve Bank of India?
- Which of the following financial instruments is classified as a negotiable, short-term unsecured promissory…
- How do microfinance institutions and Self-Help Groups interact with commercial banks under the linkage…
- What does the abbreviation 'ATM' stand for in the context of modern banking services and automated financial…