Press Release: 2025-2026/2067, Dated: 06.02.2026
The Reserve Bank of India (RBI) has released the draft revised Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2022 and invited comments from market participants and stakeholders on the proposed framework.
1. Timeline for Submission of Comments
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Last date to submit comments – 27 February 2026
Stakeholder feedback will be considered before finalising the revised Master Direction.
2. Objective of the Draft Revision
The draft Master Direction proposes a revised regulatory framework with the objective of:
- Enabling the introduction of new credit derivative instruments
- Strengthening the credit derivatives market in India
- Supporting more effective credit risk management in the corporate bond market
3. Introduction of New Credit Derivative Instruments
The draft framework seeks to enable:
- Derivatives on credit indices, and
- Total Return Swaps (TRS) on corporate bonds
These instruments are expected to:
- Provide market participants with additional tools for hedging and risk transfer
- Enhance market depth and liquidity
- Facilitate more efficient price discovery
4. Consolidation of Existing Credit Derivatives Framework
The revised Master Direction also aims to:
- Consolidate provisions relating to credit derivatives into a single framework
- Integrate and update existing directions on Credit Default Swaps (CDS)
- Remove overlaps and improve regulatory clarity
This consolidation is intended to provide a comprehensive and streamlined regulatory reference for all credit derivative instruments.
5. Strengthening the Corporate Bond Market
By revising and expanding the credit derivatives framework, the RBI seeks to:
- Improve credit risk distribution and management
- Enhance liquidity and efficiency in the corporate bond market
- Support the development of a more resilient and mature financial market ecosystem
6. Key Takeaway
The draft revised Master Direction marks a significant step towards:
- Broadening India’s credit derivatives landscape
- Aligning regulatory norms with market evolution
- Encouraging stakeholder participation through consultation
Market participants are encouraged to review the draft and submit comments within the prescribed timeline.
Click Here To Read The Full Press Release
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