Norms For Loan Securitization by NBFCs

RBI has informed that to prevent unhealthy practices surrounding securitization and assignment of loans and to allow for redistribution of credit risk to a wide spectrum of institutions, it has issued revised guidelines on ‘securitization transactions’ on August 21, 2012 which inter-alia provide the following: 

I) Mandatory retention of a portion of each Securitization by the originator to ensure more effective screening of loans; 

II) Minimum period of retention of loans prior to Securitization to give comfort to investors regarding due-diligence exercised by the originator; 

III) Stipulations regarding transfer of standard assets through final assignment of cash flows and the underlying securities and 

IV) Disclosure Norms. 

RBI has placed the detailed guideline in public domain on its website www.rbi.org.in. 

This was stated by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in the Rajya Sabha today.