The Reserve Bank of India (RBI), on November 28, 2025, issued the Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025 to establish a uniform, prudentially sound framework for securitisation activities undertaken by commercial banks. The Directions aim to promote responsible risk transfer, improve liquidity in the lending system, ensure transparency in structuring, and align Indian standards with global best practices, while preventing undesirable complex structures that may threaten financial stability.
The framework prescribes eligible assets for securitisation, minimum retention requirement (MRR), origination standards, payment priorities, caps on total retained exposure, conditions for special purpose entities (SPEs), and accounting rules. It also introduces criteria for Simple, Transparent and Comparable (STC) securitisations, along with disclosure obligations, prudential oversight, and rules for facilities such as credit enhancement, liquidity support, underwriting, and servicing. For banks acting as investors, the Directions mandate due diligence, stress testing, valuation, and credit monitoring, while capital requirements and disclosure norms for securitisation exposures are elaborated separately.
The Directions further provide detailed definitions of key securitisation concepts including bankruptcy remoteness, clean-up calls, credit enhancements, excess spread, implicit support, first-loss facilities, I/O strips, overcollateralisation, and the classification of lenders and originators. Conflicting earlier guidelines stand repealed or modified to the extent specified.
[Notification No. RBI/DOR/2025-26/160]
