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This is an archive article published on April 20, 2010
RBI proposes asset securitisation rules
The Reserve Bank of India RBI has proposed new rules for securitisation for assets which require lenders to hold on to loans for a minimum period and retain a portion of the loan till maturity,it said late on Monday. Banks seek to benefit from their loans by pooling and selling them to investors,called securitisation,which passes hellip;
The Reserve Bank of India RBI has proposed new rules for securitisation for assets which require lenders to hold on to loans for a minimum period and retain a portion of the loan till maturity,it said late on Monday.
Banks seek to benefit from their loans by pooling and selling them to investors,called securitisation,which passes on credit risk from the bank to the investors.
The Reserve Bank of India RBI said assets such as car and home loans with repayments due for up to 24 months should be held by the bank for at least nine months before selling them.
The loans,which allow for a one-time full repayment,will need to stay on the bank8217;s books for at least 12 months,it added.
Loans with a pending maturity of more than two years,which also carry a one-time repayment clause are not eligible for securitisation,the central bank said.
The RBI has sought feedback on the draft guidelines by May 10.
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