Revised RBI guidelines on securitisation likely to impact short-term loans

But they are unlikely to disrupt the securitisation market as such loans constituted only 5% of the total securitisation volume in H1FY23

The Reserve Bank of India’s (RBI) revised guidelines on securitisation are likely to have an impact on personal, consumer and other short-term loans, said rating agency Icra. Overall, the new norms are unlikely to disrupt the securitisation market as these short-tenured loans constituted only 5 per cent of the total securitisation volume in H1FY23.

Under the personal loan category, the ‘buy now, pay later’ kind disbursed by fintechs/digital lenders are typically for a tenure of up to 12 months and hence will now be ineligible for securitisation, the rating agency said in its note. 

Gold loan lenders will also see a significant depletion of the eligible pool for issuing pass-through certificates (PTCs). The impact on the micro loan asset class is expected to be limited, the note said. 

The revised securitisation guidelines of RBI disallows securitisation, through the pass-through certificate (PTC) route, of loans with residual maturity of less than 365 days. Secondly, they have said minimum holding period (MHP) would be counted from the date of full disbursement of the loan, or registration of security interest with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), whichever is later.