RBI keeps credit derivative norms on hold

The central bank in a statement said, "In view of certain adverse developments witnessed in different international financial markets, particularly the credit markets, resulting in considerable volatility in the recent past. The time is not considered opportune to introduce the credit derivatives in India, for the present."

The decision has been taken to be able to draw upon the experience of the financial sector of some of the developed countries, particularly in the current circumstances, in which the entire dimensions of the recent credit market crisis have not yet been gauged, RBI said in a statement.

RBI had issued the draft guidelines for credit derivatives, on March 26, 2003. However, taking into account the status of the risk management practices then prevailing in the banking system, the issuance of final guidelines had been deferred.

The central bank in its annual policy of 2007-08 had said that it would introduce derivatives as a part of financial sector reform in India.