RBI issues operational instructions for ‘Credit Default Swap’ transactions; allows FPIs to buy/sell CDS protections
- Blog|News|FEMA & Banking|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 15 February, 2022
Latest from Taxmann
Circular No. 23 RBI/2021-22/155, Dated: 10.02.2022
The RBI, issues operational instructions w.r.t transactions in Credit Default Swap (CDS) by Foreign Portfolio Investors (FPIs). FPIs are eligible to be categorised as non-retail users and are allowed to buy and sell CDS protection. The aggregate limit of the notional amount of CDS sold by FPIs shall be 5% of the outstanding stock of corporate bonds. FPIs shall not sell any CDS protection once the aggregate limit is utilised. These Directions shall come into effect from May 09, 2022
Clearing Corporation of India Ltd. (CCIL) shall disseminate the utilisation of aggregate limit based on the reporting by the market makers for transactions in OTC market and reporting by stock exchanges for transactions on exchanges.
Debt instruments received by FPIs as a deliverable obligation and debt instruments purchased by FPIs for meeting deliverable obligations in physical settlement of CDS contracts shall be reckoned under the investment limits for corporate bonds. In case of non-availability of investment limit at the time of physical settlement, such debt instruments shall be adjusted against the revised limits in the subsequent review of investment limits.
The notional amount of protection sold by FPIs, and the debt instruments received as a deliverable obligation as well as debt instruments purchased for meeting deliverable obligation by FPIs in physical settlement of CDS contracts shall not be subject to minimum residual maturity requirement or short-term limit, concentration limit or single or group investor-wise limits applicable to FPI investment in corporate bonds.
Click Here To Read The Full Notification
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
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
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
CA | CS | CMA
