Under automatic route, eligible borrowers in industry, infrastructure sector and NBFCs (excluding micro finance companies) can now borrow upto US $ 750 million in a year. For borrowing above this stipulation prior approval is required.
Interestingly, this is not the first time that we have witnessed innovations in derivatives markets that have led to these types of benefits. Later, I will very briefly draw some parallels between recent developments in credit derivatives and the development of agricultural futures in the mid-nineteenth century. For all their benefits, these developments have posed some significant challenges to market participants.