RBI Issues Draft Revised Master Direction on Credit Derivatives

Key Points:

• The Reserve Bank of India (RBI) has released draft revised Credit Derivatives Directions aimed at modernizing India's credit derivatives market, inviting public comments until February 27, 2026.
• The draft introduces a comprehensive regulatory framework for credit default swaps, credit indices, and total return swaps on corporate bonds, enhancing liquidity and risk management in the corporate bond market.
• This initiative reflects the RBI's commitment to creating a transparent and resilient credit derivatives ecosystem, facilitating broader participation from various financial entities.

Background: The RBI's draft is part of the Union Budget 2026-27 announcement aimed at improving the efficiency of the corporate bond market through an active derivatives market. It consolidates existing regulations while introducing new provisions for various types of credit derivatives.

What's Next: Public feedback on the draft will be accepted until February 27, 2026, after which the RBI will consider these comments before finalizing the revised directions.