RBI Proposes Credit Index Derivatives Framework

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  • Last Updated on 10 February, 2026

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RBI credit derivatives framework

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

  • 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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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied