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.
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