Credit Derivative: An immense Potential Instrument in Indian OTC Derivative Market

The purpose of this study is to highlight the economic impact of credit derivatives, a new financial product for credit risk transfer, in the Indian banking sector. Credit derivatives, these days, have become the popular financial instruments all over the world as a result of increasing debt defaults in the financial markets. Undoubtedly, credit risks have considerably increased in the banking sector over the last few years; as a result, the market of credit derivatives has achieved a thrust at an incredible pace. At present, the Indian banking sector is burdened with high NPAs, which may be likely to accrue in the future as well. Thus, there is an earnest requirement for credit protection in the banking sector.