Allow participation of non-banking entities for development of secondary corporate loan market: Task Force

RBI releases report of the Task Force on the Development of Secondary Market for Corporate Loans for comments

The Task Force Development of Secondary Market for Corporate Loans under the Chairmanship of T. N. Manoharan has submitted its report to the Governor of the Reserve Bank of India (RBI).

Among the key recommendations, the Task Force has suggested setting up of a Self-Regulatory Body of participants which will finalise detailed modalities for the secondary market for corporate loans including standardisation of documentation, while it has also recommended setting up a Central Loan Contract Registry and setting up an online loan sales platform to conduct auctions/sale process of the secondary market loans;

Further, the Task Force has suggested amending the extant regulations applicable to, inter-alia, securitization and assignment of loans, asset reconstruction, Foreign Portfolio Investment and External Commercial Borrowings; and

It has also suggested amendments in regulations issued by SEBI, IRDA and PFRDA to enable participation of non-banking entities such as mutual funds, insurance companies and pension funds.

The Reserve Bank of India had constituted a Task Force on Development of Secondary Market for Corporate Loans under the Chairmanship of T. N. Manoharan, Chairman, Canara Bank, on 29 May 2019.

The Terms of Reference of the Task Force were to review the existing state of market for loan sale/transfer in India as well as the international experience in loan trading and to make recommendations for the development of secondary market for corporate loans in India.

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