The Reserve Bank of India (RBI) has released draft rules for credit derivatives and total return swaps (TRS) linked to corporate bonds. Aimed at boosting liquidity and risk management, the framework seeks public feedback by February 27, 2026. This move aligns with Budget 2026-27’s push to strengthen India’s corporate debt market.
The RBI has unveiled draft guidelines introducing credit index derivatives and TRS on corporate bonds, marking a significant step toward modernizing India’s debt market. These instruments will allow investors to hedge credit risks, take directional views on bond yields, and improve pricing efficiency. The initiative follows the Union Budget’s announcement to expand corporate bond market access beyond government securities.
Key Highlights
-
RBI released draft rules for credit derivatives and TRS on corporate bonds
-
Framework aims to improve liquidity, pricing efficiency, and credit risk management
-
Public feedback invited until February 27, 2026
-
Move supports issuance of bonds across rating spectrums, enhancing market depth
-
TRS allows investors to gain exposure without deploying large balance-sheet capital
Conclusion
By introducing credit derivatives and TRS, RBI is laying the groundwork for a more dynamic corporate bond market. This reform is expected to attract foreign portfolio inflows, strengthen investor confidence, and provide companies with easier access to funding.
Sources: The Economic Times, RBI Press Release, Mint, Reuters