RBI

Relaxation on the guidelines to NBFCs on securitisation transactions by RBI

Relaxation on the guidelines to NBFCs on securitisation transactions

In order to encourage NBFCs to securitise/assign their eligible assets, RBI has decided 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 instalments or two quarterly instalments (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.

RBI in a circular issued on 29th Nov, 2018 has clarified that the above dispensation shall be applicable to securitisation/assignment transactions carried out during a period of six months from the date of issuance of the circular.

Other terms and conditions of the Master Directions on Non-Banking Financial Company – Systemically 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-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions dated September 01, 2016 would continue to apply

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