In recent years, complex financial products - such as asset-backed securities, derivatives, credit-default swaps, and collateralised debt obligations - have proliferated in developing countries. These products have become highly popular with banks and financial institutions as they allow them to hedge their risks and manage their financial resources more efficiently. Although various structured products have enabled the transfer of risks and enhanced the liquidity of instruments, the recent turmoil in the US sub-prime mortgage market and related developments connected with complex derivatives have also brought to the fore the risks posed by these instruments. In India, financial products such as mortgage-backed securities and asset-backed securities are in existence. Besides the securitized products, the Indian forex and rupee derivative markets have also developed significantly over the years. In its Annual Policy Statement for the year 2008-2009, the Reserve Bank of India announced the introduction of currency futures in the eligible exchanges. This book explains the basics of financial derivatives and their growth and role in the Indian financial system.