NO MIS-SELLING OF COMPLEX DERIVATIVES TO CORPORATES

Reserve Bank of India (RBI) has come out with strict guidelines under which the size of a bank’s derivatives book would be linked to its net worth. It would also require banks to keep a close watch on their bloated off balance-sheet business which primarily comprises derivatives that enable corporates, Public Sector Undertakings (PSUs) and even Small and Medium Enterprises (SMEs) to take bets on interest rate and currency movements.