RBI Relaxes Rules For NBFCs To Securitise Loan Books

The Reserve Bank of India (RBI) has relaxed rules for non-banking financial companies (NBFCs) to sell or securitise their loan books. In order to encourage non-banking financial companies (NBFCs) to securitise/assign their eligible assets, it has been decided to relax the minimum holding period (MHP) requirement for originating NBFCs, in respect of loans of original maturity above 5 years, to receipt of repayment of six monthly installments or two quarterly instalments (as applicable). This stood at one year earlier.

However, minimum retention requirement (MRR) for such securitisation/assignment transactions shall be 20% of the book value of the loans being securitised/20% of the cash flows from the assets assigned. The above dispensation shall be applicable to securitisation/assignment transactions carried out during a period of six months from the date of issuance of this circular. Other terms and conditions of the above referred directions remain the same, RBI said.

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