Securitised debt issuer has to be a trust: Sebi

The new guidelines have been formulated, taking into account market needs, cost of transactions, competition policy, professional expertise of credit rating agencies, disclosure and expertise of parties involved in the transaction and interest of investors in such instruments.

If a debenture trustee, securitisation company or an asset reconstruction company is already registered with regulatory bodies such as Reserve bank of India, Sebi or Nabard, no separate registration will be required.

 

The securitised debt instruments that are issued to public or listed on a recognised stock exchange will be in dematerialised form and will have to acknowledge actual benefit accrued to the investors in underlying debt or receivables. These regulations have provided flexibility in terms of pay through/ pass through structures and do not restrict to any particular mode.

The regulator has said that assignment of assets to the issuer should be a true sale. "Debt or receivables assigned to the issuer should be able to generate identifiable cash flows for the purpose of servicing the instrument and the originator should have valid enforceable interests in the assets and in cash flow of assets prior to securitisation," said Sebi.

The guideline has also mandated the originator to be an independent entity from the issuer and its trustees should not exercise any control over the issuer. The issuer cannot acquire any debt from any originator who is part of the same group or which is under the same management as the trustee.