RBI issues final rules on credit derivatives

Bangalore, Jun 25, 2026

Synopsis
The rules will allow resident Indian non-retail ​users to deploy instruments such as credit default swaps and ​total return swaps without ⁠any restrictions ‌on purpose, while ​limiting ​the use of these ⁠instruments by non-resident users for hedging ​purposes.

The Reserve Bank of India on Thursday issued final rules for a proposed expansion of the country's credit derivative market, after the federal ‌finance minister ⁠proposed ⁠deepening it in this year's budget.

The rules will allow resident Indian non-retail ​users to deploy instruments such as credit default swaps and ​total return swaps without ⁠any restrictions ‌on purpose, while ​limiting ​the use of these ⁠instruments by non-resident users for hedging ​purposes.

Here are some of ​the key rules in the final directions:

Retail resident users, except individuals, may undertake credit default swaps only ‌for hedging

The Reserve Bank of India rejected a ​request to ​allow ⁠credit derivatives on loans

Credit derivative contracts with non-residents may be settled ​in Indian rupees or a foreign currency

The rules are applicable with immediate effect.

[The Economic Times]