Introduction

CCIL started the settlement of cross currency deals of banks in India through the CLS Bank in April 2005. Through this arrangement, CCIL aggregates trades reported by all Member banks and enables banks to collectively enjoy the benefits of cross currency settlement through CLS Bank. This is a unique experiment whereby cross border settlement of an entire country is being achieved through a third party arrangement. Settlement through the CLS mechanism is on a payment versus payment basis. CLS Bank's unique process delivers settlement finality using Central Bank funds to simultaneously settle transactions in real time. The CLS process has a solid legal and regulatory framework. Settlement is final the moment instructions cross CLS Bank's books. CLS Bank does not guarantee settlement.