Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021
The directions provide guidelines for securitisation of standard assets by banks and other financial institutions.
Scope and Definitions: The directions apply to all banks and financial institutions, and define key terms such as securitisation, originator, and special purpose entity.
General Requirements:
Assets eligible for securitisation include loans and receivables. The Minimum Retention Requirement (MRR) ensures originators retain a minimum percentage of the securitised assets.
Origination standards, payment priorities, and observability requirements are outlined. The directions also specify limits on total retained exposures by originators.
Issuance and Listing: The directions outline conditions for issuance and listing of securitised instruments, including representations and warranties, and accounting provisions.
Simple, Transparent, and Comparable (STC) Securitisations: The directions provide guidelines for STC securitisations, which are characterised by simplicity, transparency, and comparability.
Provision of Facilities: The directions outline general conditions and specific facilities supporting securitisation structures, including credit enhancement, reset of credit enhancements, liquidity, and underwriting facilities.
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