How are the limits fixed by CCIL?
CCIL sets limits for each member bank on the basis of certain parameters such as Member’s credit rating, Net Worth, Asset value, Management quality etc. Net Debit Cap (NDC) is a limit set in US dollars for each bank. A Member bank is not allowed to have a Net Sale position in excess of this limit with respect to deals submitted for settlement through CCIL on any given day. NDC is the upper limit set by CCIL on the basis of parameters such as a Member’s Credit rating, Net worth, Asset Value, Management quality etc. Margin Factor (MF) for each bank is arrived at on the basis of its credit rating as determined by an independent rating agency and the volatility factor in respect of USD /INR exchange rate for 3 days holding period.
