Market regulator Securities and Exchange Board of India (Sebi) on Monday proposed a series of changes to norms governing securitised debt instruments (SDIs), including allowing single-asset securitisation by RBI-regulated entities. According to reports from The Economic Times, The Hindu BusinessLine, and CNBC TV18, the regulator's board announced these measures to improve ease of doing business and facilitate growth in the listed securitisation market. The proposed changes are aimed at harmonising Sebi's framework with RBI regulations and addressing current market restrictions. As per SEBI's announcement, the consultation paper proposes amendments to the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, with the objective of enhancing ease of doing business and encouraging greater retail participation in public issues.
In its consultation paper, Sebi suggested exempting entities regulated by the Reserve Bank of India (RBI) from the requirement that limits exposure to a single obligor in the asset pool. As reported by The Economic Times, The Hindu BusinessLine, and CNBC TV18, the current rule caps exposure to any single obligor at 25 per cent of the pool, which was aimed at preventing concentration risk but has restricted the listing of SDIs backed by single assets. The regulator noted that such structures are permitted under the RBI's framework, creating a regulatory gap that these changes would address. According to SEBI's announcement, the proposed amendments include modifications to the definition of debt under the SDI framework, expanding it to include a wider range of financial assets while ensuring compliance with RBI guidelines. The proposed relaxation is expected to support the development of the listed securitisation market, particularly for RBI-regulated entities that are already subject to prudential oversight.
Sebi has proposed removing restrictions that currently prevent securitisation transactions between entities within the same group, provided the originator is RBI-regulated. As reported by The Hindu BusinessLine and CNBC TV18, the RBI framework does not contain any such prohibition but it requires that the originator should not exercise control over the SPDE or trustee. This change addresses the inconsistency between Sebi and RBI regulations, allowing for more flexible transaction structures while maintaining regulatory oversight. The change is intended to align with RBI norms and provide greater flexibility, while still operating within a regulated framework.
The regulator has proposed replacing the requirement of winding up securitisation schemes in case of suspension or cancellation of a trustee's registration with the appointment of a new trustee. According to The Economic Times, The Hindu BusinessLine, and CNBC TV18, this change addresses inconsistencies with RBI regulations that do not permit unwinding of such transactions. Additionally, Sebi recommended removing restrictions that currently bar securitisation transactions between an originator and an SPDE belonging to the same group, provided the originator is regulated by the RBI. As per SEBI's announcement, the proposed changes include adjustments to disclosure requirements, minimum ticket sizes, and risk retention norms, all aimed at balancing investor protection with market efficiency.
The regulator has proposed shifting the responsibility of periodic disclosures on the performance of the underlying asset pool from the originator to the servicer. As reported by The Economic Times, The Hindu BusinessLine, and CNBC TV18, this change aims to ensure timely and accurate information flow to investors, given that the servicer handles the collection and monitoring of receivables. Sebi also suggested changes to the composition of the board of trustees of special purpose distinct entities (SPDEs) for RBI-regulated originators, proposing to limit representation to one member without veto powers, aligning with RBI norms to maintain arm's length transactions. According to SEBI's announcement, the periodic disclosure requirements, effective from March 31, 2026, will mandate detailed reporting on asset maturity, risk retention, and recovery initiatives, enhancing transparency and investor confidence in securitisation transactions.
According to The Economic Times, The Hindu BusinessLine, and CNBC TV18, Sebi has invited public comments on the proposals till May 25, 2026, providing stakeholders with adequate time to provide feedback on the proposed regulatory changes. The consultation process represents a structured approach to incorporating market feedback before finalizing these significant modifications to the securitisation framework. As per SEBI's announcement, stakeholders, including market participants and legal experts, are encouraged to submit their feedback by the May 25 deadline to shape the final regulatory framework, with the proposed changes aimed at streamlining processes and reducing regulatory hurdles for market participants, particularly in the debt instruments segment.
