This concern is sought to be addressed through mandating banks to ensure suitability and appropriateness of the derivatives products they are selling to their clients. 23. It is pertinent to mention briefly a theme current in contemporary discourse- BondCurrency-Derivatives (BCD) nexus. This is an ideal objective in an open economy financial system.
What it means is this: any foreign investor, using any international currency, can buy an Indian Government or corporate liability denominated in Rupees or otherwise and hedge all risks, either onshore or offshore, the attendant credit, interest rate & currency risks. This is a natural prerequisite for free international capital movements, and from an Indian perspective, for mobilisation of the much needed resources.