The Reserve Bank of India (RBI) on June 25, 2026, issued the Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2026.
These Directions shall come into force on June 25, 2026.
The following has been stated:
• The Master Direction overhauls India's regulatory framework for the credit derivatives market to deepen the corporate bond market and improve credit risk management. The Directions expand the range of permitted products by allowing Credit Default Swaps (CDS), Total Return Swaps (TRS) and Credit Index Derivatives, while prescribing comprehensive rules on eligible reference obligations, market participants, settlement, documentation, reporting and risk management.
• Resident non-retail participants are permitted to use credit derivatives without restrictions on purpose, whereas non-residents may use them only for hedging.
• The framework also introduces detailed requirements for market makers, user eligibility, hedging norms, valuation, collateral, disclosure, accounting, prudential treatment, trade reporting, and standardisation through market bodies, while establishing mechanisms for determining credit events and settlement.
• Overall, the Directions aim to enhance liquidity, broaden participation, strengthen transparency and risk management, and develop a robust, globally aligned credit derivatives market in India while safeguarding financial stability.
The detailed notification is attached below.
[Notification no. - FMRD.DIRD. 03/14.03.004/2026-27]
