- This framework supersedes the 2022 guidelines, marking a major regulatory update.
- It introduces derivatives on credit indices and Total Return Swaps (TRS) on corporate bonds.
- Participation norms are widened — non‑retail residents face fewer restrictions, while retail investors are limited to hedging.
- The directions apply to both OTC markets and recognized stock exchanges.
- They aim to deepen credit risk transfer mechanisms and provide better hedging tools.
- The framework also seeks to boost market liquidity while maintaining robust risk safeguards.
- Overall, it strengthens India’s credit derivatives market and financial stability architecture.
Question:
Q.1 Which category of participants has been granted fewer restrictions under the RBI (Credit Derivatives) Directions, 2026?a) Retail resident investors
b) Cooperative banks
c) Non-retail residents
d) Small finance banks
Answer: c) The framework widens participation by easing restrictions on non-retail resident participants, encouraging greater market participation.
