Built to last?

There is concern that some foreign dealers have sold products to Indian corporates that they do not fully understand. This raises fears of a regulatory backlash, but some parties reckon new supervisory rules are already too severe. By Duncan Wood

Extortionate margins, opaque term sheets, risky products sold to gauche corporate treasurers - India's derivatives market has all the ingredients necessary for a major mis-selling scandal, says AV Rajwade, a Mumbai-based independent consultant. The problem has been masked because dealers are habitually selling transactions to corporates and then using Indian state banks as intermediaries to get the deal done, booking it as institutional business to reduce credit risk and avoid the scrutiny that