The Bilateral Netting of Qualified Financial Contracts Act, 2020

Summary of The Rashtriya Raksha University Act, 2020
Establishment & Status
*Name: Rashtriya Raksha University *Location: Gandhinagar, Gujarat *Status: Incorporated as a Body Corporate with perpetual succession and a common seal *Origin: Established by renaming/upgrading the Raksha Shakti University, repealing the Gujarat Act 14 of 2009
Key Provisions
1. Incorporation Effects
• All references, properties, rights, and liabilities of Raksha Shakti University are transferred to the new University.
• Employees continue under the same terms unless altered or terminated as per the Act.
2. Objects of the University
• Foster education and research in policing, security, law enforcement, criminal justice, cyber security, AI, and related fields.
• Emphasize public safety, citizen-centric services, with a focus on women, weaker sections, and minorities.
3. Powers & Functions
• Provide education and research in specified security and policing sciences.
• Establish campuses and centers both in India and internationally.
4. Governance & Structure
• Authorities: Includes a Governing Body, Executive Council, and Academic Council.
• Employee & Student Provisions: Transitional measures for employees, detailed governance for students.
5. Miscellaneous Provisions
• Arbitration Tribunal for employee disputes.
• Grievance Redressal for student disciplinary actions and examination issues.
• Classified as a Public Authority under the Right to Information Act.
• Central Government Oversight: Power to review, direct, and resolve difficulties.
• Transitional Provisions: Ensuring a smooth takeover from the predecessor university.
Enactment Details
*Act Number: 31 of 2020 *Enactment Date: 28th September, 2020 *Commencement Date: 1st October, 2020 (as notified)

Legislative History:

The Bilateral Netting of Qualified Financial Contracts Act, 2020

Short Title - The Bilateral Netting of Qualified Financial Contracts Act, 2020

Act Number / Year - 30 of 2020

India Code Act ID - 202030

Introduced In - Lok Sabha

Presidential Assent Date - September 28, 2020

Official Gazette Publication - September 28, 2020

Enforcement Date - October 1, 2020

Nodal Ministry - Ministry of Finance

Precedent & Statutory Rationale

1. Gross-Basis Capital Constraints and Systemic Risk:

o Prior to 2020, India lacked a formal statutory framework recognizing bilateral netting for over-the-counter (OTC) derivative and financial transactions. Financial institutions and banks were legally mandated to measure counterparty credit exposure on a gross basis rather than a net basis. This artificially inflated capital requirements, blocked significant amounts of liquidity, and amplified systemic risk during default events.

2. Enhancing Financial Stability and Market Competitiveness:

o Grounded in recommendations from international multilateral organizations (such as the International Swaps and Derivatives Association - ISDA) and domestic financial sector reforms, the legislation was enacted to provide legal certainty, encourage efficient margining, reduce capital burdens on banks, and deepen India's corporate bond and derivatives markets.

Parliamentary Trajectory & Enactment

• Formulation: Developed and piloted by the Ministry of Finance (Department of Economic Affairs) to modernize India's financial architecture and align it with global regulatory standards.

• Parliamentary Passage: Introduced as the Bilateral Netting of Qualified Financial Contracts Bill in the Lok Sabha on September 14, 2020; debated and passed by the Lok Sabha on September 20, 2020; and subsequently passed by the Rajya Sabha.

• Presidential Assent: Received formal Presidential Assent from President Ram Nath Kovind on September 28, 2020, entering the statute book as Act No. 30 of 2020.

• Enforcement: Brought into active operational force on October 1, 2020

Source: India Code and Ministry of Finance Official Records.