The Reserve Bank of India has officially issued draft amendment directions for securitisation notes, marking a significant step toward enhancing risk management, liquidity, and transparency in India's securitisation market. According to the latest RBI announcement, these four draft amendment directions apply to commercial banks, small finance banks, non-banking financial companies, and all-India financial institutions. The proposed changes represent a comprehensive approach to developing a more uniform framework for securitisation transactions across the entire financial system, with the scope spanning both banking and non-banking segments. As per Business Standard, the RBI stated that the changes are intended to "improve efficiency, liquidity and transparency in issuance and subsequent transfer of Securitisation Notes (SNs)."
The RBI has proposed that all securitisation notes be issued, held and transferred only in dematerialised (demat) form, marking a significant shift toward digital securities processing. Under the proposed changes, "the issuance, holding and subsequent transfer of securitisation notes under these Directions shall only be in a dematerialised form." This mandatory demat requirement is designed to make the issuance and transfer process of securitisation notes more transparent for all market participants, ensuring greater efficiency and standardisation across the securitisation market. The RBI clarified that this represents a comprehensive approach to digital transformation in securitisation transactions.
The RBI has extended the existing ₹1 crore minimum investment requirement beyond the point of issuance to every subsequent transfer of securitisation notes. As reported by Business Standard, this enhanced requirement ensures that securities remain largely in the hands of institutional and sophisticated investors. Under the Draft (Securitisation Transactions) Amendment Directions, agreements between the originator and special purpose entity (SPE) must include a clause requiring the SPE to maintain the minimum ticket size on an ongoing basis, with the ticket size defined as the investment made by a single investor. The RBI has clarified that "the ticket size" refers to the investment made by a single investor, ensuring continued compliance with the ₹1 crore minimum investment threshold throughout the securitisation process.
Comments on the draft guidelines have been invited from the general public and other stakeholders until August 27, 2026. According to the RBI announcement, feedback can be submitted via the 'Connect2Regulate' section link available on the Reserve Bank's website, or alternatively, it can be sent by post or email to the Chief General Manager, Credit Risk Group, Department of Regulation, Central Office, Reserve Bank of India, Mumbai. If adopted, the changes will take effect from October 1, 2026, following the completion of the public consultation process. The extended timeline provides adequate opportunity for industry participants to provide feedback on the proposed amendments, ensuring comprehensive stakeholder engagement before implementing the new regulatory framework.
The RBI also proposed aligning the definition of a public offer of securitisation notes with the Securities and Exchange Board of India (Sebi) regulations. As reported by Business Standard, an offer will be deemed public if it is made to the number of persons specified under the Sebi (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, as amended from time to time. The central bank has also revised the listing requirement, linking it to the investor threshold prescribed under Sebi's securitised debt regulations rather than requiring securitisation notes offered to 50 or more investors to be listed.
Securitisation allows banks to pool loans, such as home, vehicle and other retail loans, and transfer them to a special purpose entity (SPE), which then issues securities backed by the cash flows from those assets. According to Business Standard, this process redistributes credit risk by repackaging loans into tradeable securities with different risk profiles, allowing lenders to improve liquidity and free up capital for fresh lending while giving investors access to diversified credit exposures. The framework also prohibits securitisation of certain asset classes, including re-securitisation exposures, synthetic securitizations, revolving credit facilities such as credit card receipts, and loans with a residual maturity of less than one year.
