The RBI and European Securities and Markets Authority (ESMA) has signed a MoU

Current Context: The Memorandum of Understanding (MoU) between the Reserve Bank of India (RBI) and the European Securities and Markets Authority (ESMA) was signed on 27 January 2026 in New Delhi, during the visit of EU leaders for India’s 77th Republic Day.

• Its aim was to restore EU banks’ access to Indian Central Counterparties (CCPs) like CCIL, removing punitive capital charges.
• A key highlight was the “regulatory reliance model”, where ESMA agreed to depend on RBI’s supervision instead of demanding direct audits.
• The MoU also set up a permanent framework for information exchange and risk management cooperation.
• It officially replaced the 2017 pact, modernizing the legal basis for recognition of Indian CCPs.
• The agreement coincided with the conclusion of the India–EU Free Trade Agreement negotiations, marking deeper economic integration.

Question:

Q.1 The primary objective of the Reserve Bank of India–European Securities and Markets Authority MoU was to:
a) Allow Indian banks to operate freely in the European Union
b) Restore European Union banks’ access to Indian Central Counterparties
c) Enable joint supervision of European banks
d) Harmonize monetary policies between India and the European Union

Answer: b) The MoU aimed to restore access of European Union banks to Indian Central Counterparties (CCPs) by addressing regulatory constraints.