What changed
RBI replaced earlier securitisation guidelines with a consolidated direction covering all aspects from origination to capital treatment. New chapters on Simple, Transparent and Comparable (STC) securitisations and detailed facility provisions (credit enhancement, liquidity, underwriting) were introduced. The definition of bankruptcy remote and clean-up call were formalised, and minimum retention requirements were reaffirmed.
What it means for you
Banks must overhaul their securitisation frameworks to align with the new directions, especially for STC securitisations which offer regulatory capital benefits. The detailed provisions on credit enhancements and liquidity facilities will impact structuring costs and risk weights. Investor banks face stricter due diligence and stress testing requirements, increasing compliance burden but improving market transparency.
What you must do
- Review and update securitisation policies to comply with the new directions, especially MRR and retained exposure limits.
- Train staff on STC criteria and capital treatment for securitisation exposures.
- Enhance due diligence and stress testing frameworks for securitisation investments.
- Ensure all new securitisation transactions meet the bankruptcy remote and clean-up call definitions.
- Update disclosure norms in line with Chapter VI requirements.
Who it affects
Commercial banks (excluding SFBs, Payment Banks, LABs), Originators of securitisation transactions, Investor banks in securitisation exposures
What is the effective date of the new securitisation directions?
The directions came into effect on November 28, 2025, the date they were placed on RBI's website.
Which banks are covered under these directions?
All commercial banks as defined under Section 5 of the Banking Regulation Act, 1949, excluding Small Finance Banks, Payment Banks, and Local Area Banks.
What is the key benefit of STC securitisations?
STC securitisations qualify for preferential regulatory capital treatment, provided they meet the criteria outlined in Chapter III.