RBI proposes easier securitisation, loan sale guidelines

RBI proposes easier securitisation, loan sale guidelines

The Reserve Bank of India (RBI) is proposing a new set of guidelines that would address the differential between mortgage loans and other loans securitisation, simplifying regulations. In two draft papers released on its website the central bank also proposed to bridge the difference between sale of loans and assignments’ of receivables which lenders use to improve their cash flows while keeping the loans on their books.

In the draft guidelines RBI said has modified the definition of securitisation to include single asset securities against the multiple asset securities allowed in the existing norms.

Only transactions that result in multiple tranches of securities being issued reflecting different credit risks will be treated as securitisation transactions are covered in these guidelines.

Loans even purchased from other lenders can be securitised which is a change from the current rules.