CDS mkt may not takeoff with RBI's stiff approach: Experts

Credit default swaps will make its debut in India after getting a nod from the Reserve Bank. The instrument, popularly known as CDS, promises the holder payment of money to the insured amount of bond holding in case of a default.

Quick read: RBI allows FIIs, MFs to hedge risk in corp bonds

Speaking to CNBC-TV18, Ajay Mahajan, MD and Head Financial Markets at UBS said CDS will lead to development of the domestic corporate bond market. However, he said the development of CDS market will take some time. 

RBI is expected to come out with new guidelines in October. The guidelines will carry safeguards to prevent abuse of position by financial intermediaries to boost their revenues as it happened with currency derivatives that sank many small companies.

Meanwhile, currency market expert AV Rajwade is not very bullish on CDS with regards to the current guidelines.