wordpress blog stats
Connect with us

Hi, what are you looking for?

, ,

RBI Disallows Securitising Loans With Less Than 365-Days Residual Maturity

RBI amends its Master Directions on Securitisation of Standard Assets to disallow securitisation of loans with less than 365 days of residual maturity.

India’s central bank amended its Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021, to disallow securitisation of "Loans with residual maturity of less than 365 days", on 5th December, 2022. Amit Kumar Gupta, founder and Chief Investment Officer of Equity Research Firm FinTrekk Capital, tweeted that this "implies loans with residual maturity <365 days cannot be securitized. This will impact MFIs, Gold finance companies and many fintechs." What is securitisation: Securitisation involves pooling together various risk assets (like loans) and redistributing them into tradable securities, which are sold to investors. These securities can be repackaged with assets from different risk profiles (like high risk, low risk, etc). Why it matters: If loans with a residual maturity of less than 365 days will not be allowed to be securitised, this will reduce the volume of tradable securities available in the market but the quality of securitisation will improve, Amit Kumar Gupta, a SEBI registered Research Analyst, told Medianama. Anshul Gupta, co-founder and Chief Investment Officer at Wint Wealth said in a tweet that, "This will affect Microfinance, Gold loan and Personal loan companies significantly & render lot of their portfolios unsecuritisable!" Background: RBI issued its Master Directions on Securitisation and Standard Assets in 2021, which were praised for giving more securitisation options. They reduced the minimum holding period of loans that can be securitised from 12 months to 6 months. The RBI had also reduced the minimum amount of loan to be retained on the book from 10 %…

Please subscribe/login to read the full story.
Written By

I cover privacy, surveillance and tech policy. In my reporting, I try my best to present the most relevant facts, and sometimes add in a pinch of my thoughts.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

India's smartphone operating system BharOS has received much buzz in the media lately, but does it really merit this attention?

News

After using the Mapples app as his default navigation app for a week, Sarvesh draws a comparison between Google Maps and Mapples

News

In the case of the ‘deemed consent' provision in the draft data protection law, brevity comes at the cost of clarity and user protection

News

The regulatory ambivalence around an instrument so essential to facilitate data exchange – the CM framework – is disconcerting for several reasons.

News

The provisions around grievance redressal in the Data Protection Bill "stands to be dangerously sparse and nugatory on various counts."

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ