RBI gives relaxation on the Guidelines to NBFCs on securitization transactions

Nov 30, 2018 | by Avantis RegTech Legal Research Team


The Reserve Bank of India (RBI) on November 29, 2018 has issued a notification regarding relaxation on the Guidelines to NBFCs on securitization transactions.

RBI has given reference of the Guidelines on Securitisation Transactions vide paragraph 102 of Master Directions on Non-Banking Financial Company – Systematically Important Non- Deposit taking Company and Deposit taking Company (Reserve Bank) Directions dated September 01, 2016 and paragraph 89 of Non-banking Financial Company-Non-Systematically Important Non-Deposit taking Company (Reserve bank) Directions dated September 01, 2016.

In order to encourage NBFCs to securitise/assign their eligible assets, it has been decided by RBI to relax the Minimum Holding Period (MHP) requirement for originating NBFCs, in respect of loans of original maturity above 5 years, to receipt of repayment of six monthly installments or two quarterly installments (as applicable), subject to the following prudential requirement: 

Minimum Retention Requirement (MRR) for such securitisation/assignment transactions shall be 20% of the book value of the loans being securitised/20% of the cash flows from the assets assigned.

 

Minimum Retention Requirement (MRR) for such securitisation/assignment transactions shall be 20% of the book value of the loans being securitised/20% of the cash flows from the assets assigned.

The above dispensation shall be applicable to securitisation/assignment transactions carried out during a period of six months from the date of issuance of this circular. Other terms and conditions of the above referred Directions remain the same. 

[RBI/2018-19/82(DNBR (PD) CC.No.95/03.10.001/2018-19)]

URL: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT82DF2304596CDF461EAB367D1D10C44255.PDF


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