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RBI Bond Forwards: New G-Sec Derivative Rules

22 February 20251 min read
BANKING & FINANCERBI BondForwards: NewG-Sec DerivativeRules22 February 2025safalsetu.com

Why in the news

RBI framed rules on bond forwards so long-term investors can manage cash flow and rate risk.

Key facts

  • Effective: 2 May 2025; covers every OTC deal in India.
  • Bond forward: the buyer commits to take a chosen G-sec later at a fixed date and terms.

Wider aim

  • Richer interest rate derivatives market, better liquidity and price discovery.
  • Users: banks, financial institutions, pension and insurance funds, institutional investors.

Exam angle

  • Regulator: RBI. Terms: OTC, G-sec.

Test yourself

1. From which date do RBI's bond forward guidelines on G-secs apply?

The implementation date is 2 May 2025.

2. A bond forward is best described as which type of contract?

It is a rupee interest rate derivative to buy a G-sec at a future date.

3. The bond forward guidelines cover transactions in which market segment?

They cover all OTC market transactions in India.

This topic is part of Daily Current Affairs 22 February 2025 (10 topics).

All topics of the dayDay quizFebruary 2025

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