Decoded: Understanding the draft guidelines on credit default swaps

In the past too, the RBI has tried to launch a comprehensive CDS product but it never really took off

Topics
Reserve Bank of India | Decoded

Anup Roy  |  Mumbai 

The Reserve Bank of India (RBI) has unveiled draft guidelines on credit default swaps (CDS). In the past too, the RBI has tried to launch a comprehensive CDS product but it never really took off. Here’s a look at why that was the case and what has changed now.

What is a credit default swap (CDS)? It is a form of insurance that a bond investor buys against potential defaults by a corporation. The seller of the CDS is not necessarily an insurance company and the contract can be written (issued) by any permitted regulated financial entity, mainly banks. If the underlying bond ...

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, February 18 2021. 06:10 IST