Brief Overview:
RBI has proposed changes to the existing securitisation norms. These changes are aimed at enabling simpler tracking of securitisation notes through digitisation. RBI has also clarified when an offer of such securitisation notes would trigger a public offer. The amendments, once effective, shall be applicable to Commercial Banks, Small Finance Banks, Non-Banking Financial Companies and All India Financial Institutions, and are subject to public / stakeholder comments.
Technical Details:
The draft amendments propose the following:
- securitisation notes are to be issued, held and transferred only in dematerialised form;
- the minimum ticket size shall be INR 10,000,000/- at the time of issuance as well as any subsequent transfers;
- the agreement between the originator and the special purpose entity (“SPE”) shall require the SPE to continuously monitor and ensure compliance with the minimum ticket-size requirement; and
- an offer of securitisation notes shall be deemed a public offer, if made to a number of persons equal to or exceeding the threshold prescribed under Regulation 21 of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008.
JC Takeaways:
The proposed amendments are expected to strengthen standardisation and transparency in the securitisation market, while facilitating dematerialised trading and aligning the framework more closely with the Securities and Exchange Board of India regime applicable to listed securitised debt instruments.
For further details, please see:
RBI Press Release – Draft (Securitisation Transactions) Amendment Directions
For any queries/clarifications, please feel free to ping us and we will be happy to chat:
