Reserve Bank of India issues final rules on credit derivatives

The Reserve Bank of India has issued final directions on credit derivatives, allowing resident non-retail users to freely deploy instruments such as credit default swaps and total return swaps without purpose restrictions, while restricting non-resident users to hedging purposes only. The RBI also rejected a proposal to permit credit derivatives on loans, and retail resident users (except individuals) may undertake credit default swaps solely for hedging. The new rules are applicable with immediate effect, marking a significant step in deepening India's credit derivatives market.