The Reserve Bank of India has issued draft guidelines requiring all securitisation notes from commercial banks to be held in dematerialised form. The minimum ticket size for these investments remains at Rs 1 crore. These rules aim to boost transparency and standardize processes in the securitisation market.
Detailed Coverage
The Reserve Bank of India (RBI) has introduced draft amendments to its securitisation transaction framework, proposing that all securitisation notes issued by commercial banks must be held in dematerialised (demat) form. This move is part of the central bank’s ongoing efforts to modernize financial instruments and improve the digital tracking of transactions. By moving away from physical certificates, the regulator intends to simplify the transfer process and enhance market transparency for these complex debt instruments.
Minimum Investment Threshold Maintained
Despite the proposed changes to the mode of holding, the RBI has decided to keep the minimum investment size, commonly referred to as the ticket size, at Rs 1 crore. This rule applies both to the initial issuance and any subsequent secondary market transfers. The central bank emphasized that this threshold is per investor, ensuring that securitisation notes remain a product primarily targeted at institutional or high-net-worth investors rather than the retail public.
New Compliance Requirements
To ensure strict adherence to these rules, the draft guidelines propose that agreements between originators—the banks that pool loans for securitisation—and Special Purpose Entities (SPEs) must contain a mandatory compliance clause. This clause would legally bind the parties to maintain the Rs 1 crore minimum ticket size throughout the life of the instrument. This measure is designed to prevent the fragmentation of holdings that could occur if notes were subdivided or sold in smaller quantities.
Alignment with SEBI and Implementation Timeline
Additionally, the RBI is looking to harmonize its definition of a 'public offer' for securitisation notes with the existing regulations set by the Securities and Exchange Board of India (SEBI). Specifically, the proposal aims to align with the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008. This would provide clearer regulatory oversight when offerings are made to a larger group of potential investors.
The RBI has invited public feedback on these draft guidelines until August 27, 2026. Once finalized, the rules are proposed to come into effect on October 1, 2026. This window provides commercial banks and financial institutions time to update their systems to support dematerialised issuance and ensure their legal agreements with SPEs comply with the new mandatory clauses.