Business Reports

Draft Guidelines Of RBI On Credit Default Swap

Reserve Bank of India (RBI) has come out with draft guidelines on Credit Default Swap (CDS) per notification dated May 2007. The guidelines initially are addressed to commercial banks and primary dealers only and the scope is limited to usage of Credit Default Swap by the banks and primary dealers for sale and purchase of credit protection in respect of single resident reference entity. This article provides suggestions on what additionally needs to be addressed to make the world of credit derivatives in India more meaningful and in line with the expectation of the market