You’re right. But you and Kotak didn’t cite the Dec 2023 circular, but cited the Jun 2023 circular, which said nothing about client fd prohibition and along with your wording
threw me off.
The actual circular prohibiting client FDs:
https://nsearchives.nseindia.com/content/circulars/INSP60369.pdf
Eligibility of bank instruments as collateral:
7.The bank instruments provided by clients as collateral (i.e. client FDRs and BGs) cannot be upstreamed to CCs, and they shall be ineligible to be accepted as collateral in any segment of securities market.
8.However, in the interest of encouraging and development of hedging in the commodity derivatives market, it has been decided to allow Bank guarantees provided only by non-individual clients, based on certain terms and conditions.
Interestingly, it also says,
- The provisions of this framework shall not be applicable to bank-CMs (including
Custodians that are banks), and for proprietary funds of SBs/CMs in any segment and SB’s proprietary funds deposited with CM in the capacity of a client
Isn’t Kotak a bank-cm?