The Reserve Bank of India (RBI) has been regularly reviewing the burgeoning bond-derivative trades between banks and insurance companies, and does not see any major reasons for concern at the current juncture.
The central bank is said to have been raising queries on banks’ capital position in the context of these transactions, which make use of derivative instruments called forward-rate agreements (FRA). The total outstanding of such trades is estimated to be in the region of ₹2 lakh crore.
Source:
Economic Times
