It is, however, clear that NSCCL will not be given the mandate to deal in debt market clearing, even as a section of frontline financial market-players have openly called for the need to have just one clearing corporation.

Sources associated with the move to set up the debt market clearing corporation told The Financial Express on the sidelines of the Risk Management Retreat 2000, hosted by the Invest India Economic Foundation (IIEF), that talks were in progress to explore how NSCCL could contribute.

``It could be in expertise, software or other things,'' the sources said.While the details of the new corporation are yet to be finalised, it is believed that the corporation would be capitalised at anywhere between Rs 10 crore and Rs 50 crore and may have a guarantee fund of Rs 1,000 crore or so.

SBI and IDBI apart, ICICI, HDFC Bank, Bank of Baroda and the Primary Dealers' Association (PDA) are partners in setting up the clearing corporation. While no confirmation is available yet, the name of Dr RH Patil, former managing director, National Stock Exchange, is doing the rounds as the obvious choice to be the chairman of the corporation. Dr Patil, however, denied being in the running.

The sources also said there was a clear possibility of setting up the debt clearing corporation by the end of 2000-01. However, at the Risk Retreat sessions, a debate broke out on the need for having another new clearing corporation, when NSCCL was already doing a good job of securities clearing and guaranteeing trades. The issue was raised by both National Securities Depository Ltd (NSDL) managing director CB Bhave, and Industrial Investment Bank of India (IIBI) chairman Basudeb Sen, who said NSCCL should also be asked to handle the debt market clearing and settlements. When asked why NSCCL was not targeting the debt market, Mr Ravi Narain of NSCCL said: ``We don't have the mandate.'' However, speaking at the sessions, Dr Patil said there was an element of risk involved in burdening a single entity with the whole clearing process, and an option was always a better thing.

He also said that apart from government securities, the main job of the proposed debt clearing corporation was to deal in foreignexchange clearing and settlements, and that was under the jurisdiction of the Reserve Bank of India. Besides, an agent would also have to be appointed by the new clearing corporation, since forex transactions are linked to the New York financial system.

Speaking to The Financial Express, Mr Bhave said a single clearing corporation was a better option, since there was a gradual move by a lot of financial players towards convergence. ``A lot of banks have brokerages who are also primary dealers. If there is one clearing entity, profits in one market can be set off against losses in another, and since the clearing entity is one, there won't be a problem. Otherwise, we are only adding costs to the system,'' Mr Bhave pointed out. Dr Sen, at a session at the Retreat, said that since ``someone had already managed to ride the tiger, there was no need for another similar effort.'' The NSCCL experience in clearing and guaranteeing trades could be made available to the debt market.