RBI puts on hold credit derivative norms

Mumbai, Jun 19 (UNI) The Reserve Bank of India (RBI) today deferred introduction of credit derivatives in India, stating that the time was not opportune for the move.

Stating that the entire dimension of the recent credit market crisis had not yet been gauged, the RBI in a statement here said the decision to defer introduction of credit derivative with a view to draw upon experience of the financial sector of some of the developed countries.

The Bank said in a statement that in view of certain adverse developments, witnessed in different international financial markets, resulting in considerable volatility, such as mounting losses suffered by banks on account of sub-prime crisis, has increased the need for the central banks to inject liquidity into the system.

RBI had issued 'Draft Guidelines for Introduction of Credit Derivatives in India', on March 26, 2003, inviting comments from banks and other stake holders. 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 apex bank said.

UNI PP SSS/VK AG1754