Mumbai, Feb 24 (PTI) Reserve Bank Deputy Governor Shyamala Gopinath today said the timing, definition, and the modalities of debt rescheduling under the proposed credit default swap (CDS) scheme have to be discussed in detail as it is a very complex issue. "We need to look at the entire issue clearly. Since CDS is a tradable product, we have to make it transparent," said Gopinath. Speaking on the sidelines of an Indian Merchant Chamber function here, she said, "Debt rescheduling is a very complex issue globally, and so was here when we discussed it with the industry initially...There are many questions involved in it and the first question is who does the rescheduling?" Gopinath added, "If one company goes to its bank and asks for rescheduling its debt or loan, how do you go about doing it? The point is the whole issue has to be transparent as CDS is a tradable product." Yesterday, RBI issued the draft CDS guidelines, and has sought comments from stakeholders by March 8. The CDS is a swap contract in which the buyer of protection against a bond or loan makes regular premium payments to a counterparty who assumes the risk in the event of a default. It is a risk management product that helps entities guard against possibility of defaults and helps in developing the corporate bond market, which is almost non-existing here as the debt market is nearly 80 per cent dominated by government papers.
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