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RBI releases discussion paper on Securitisation of Stressed Assets Framework

Securitisation involves pooling of loans and selling them to a special purpose entity (SPE), which then issues securities backed by the loan pool.

January 25, 2023 / 08:20 PM IST
The paper broadly covers nine relevant areas of the framework including asset universe, asset eligibility and minimum risk retention

The paper broadly covers nine relevant areas of the framework including asset universe, asset eligibility and minimum risk retention

The Reserve Bank of India (RBI) on January 25 released a discussion paper seeking feedback on framework for Securitisation of Stressed Assets Framework (SSAF).

The discussion paper broadly covers nine relevant areas of the framework including asset universe, asset eligibility, minimum risk retention, regulatory framework for special purpose entity and resolution manager, access to finance for resolution manager, capital treatment, due diligence, credit enhancement, and valuation.

“It draws upon similar frameworks introduced in other jurisdictions, while trying to keep it structurally aligned with the framework for securitisation of standard assets,” the RBI said in a release.

The RBI, in September, announced in the Statement on Developmental and Regulatory that a Discussion Paper (DP) detailing relevant contours of the proposed framework on Securitisation of Stressed Assets (SSAF).