RBI rolls out Draft Framework for Securitisation of Standard Assets & Draft Comprehensive Framework for Sale of Loan Exposures; invites comments within 30th June, 2020

In a Press Release dated 8th June, 2020 the Reserve Bank of India (“RBI”) has informed that it has placed on its website the following draft documents for public comments.

  1. Draft Framework for Securitisation of Standard Assets proposing to revise the previous Guidelines.
  2. Draft Comprehensive Framework for Sale of Loan Exposures

 

RBI invites comments on the draft frameworks and the responses to the discussion questions may be submitted to the Reserve Bank by email by 30th June, 2020.

Applicability of the Draft Guidelines:

The Draft Guidelines are applicable to all Scheduled Commercial Banks (excluding Regional Rural Banks), all India Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI); and, all Non Banking Financial Companies (“NBFCs”) including Housing Finance Companies (“HFCs”).

Objectives:

  1. The draft guidelines attempt to align the regulatory framework with the Basel guidelines on securitisation that have come into force effective January 1, 2018.
  2. The revisions also take into account the recommendations of the Committee on Development of Housing Finance Securitisation Market in India (Chair: Dr. Harsh Vardhan) and the Task Force on the Development of Secondary Market for Corporate Loans
  3. Further, the regulatory guidelines for direct assignment transactions are proposed to be separated from the securitisation guidelines and subsumed under a separate set of Comprehensive Guidelines on Sale of Loan Exposures in order to harmonise the extant guidelines on sale of loan exposures issued through various circulars, and make them consistent with the changed resolution paradigm in the form of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and the Prudential Framework for Resolution of Stressed Assets issued vide circular dated June 7, 2019.

 

Source: Reserve Bank of India

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