Brief Overview:
RBI has clarified that National Bank for Financing Infrastructure and Development (“NaBFID”) is eligible to act as a market maker for the purpose of credit derivatives.
NaBFID is also expressly recognised as an eligible participant to undertake repo transactions pursuant to the RBI Notification.
Technical details:
RBI had wide a press release declared that NaBFID will be treated as an All India Financial Institution (“AIFI”).
However, the Reserve Bank of India (Credit Derivatives) Directions, 2022 (“Credit Derivatives Directions”) did not expressly include NaBFID in the list of market makers (among other AIFIs). Additionally, NaBFID was not mentioned in the Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 (“Repo Directions”) in the list of eligible participants.
Accordingly, the Credit Derivative Directions and the Repo Directions have now been amended to cover NaBFID.
JC takeaway:
This notification will provide the much-needed clarity with respect to the permitted products NaBFID can trade in as an AIFI.
For further details, please see:
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