SEBI Proposes To Permit Single-Asset Securitisation By Relaxing 25% Cap For RBI-Regulated Entities

The Securities and Exchange Board of India (SEBI) has proposed to relax its rules to allow securitisation transactions where the exposure to a single obligor exceeds the existing 25% limit, in respect of RBI-regulated entities.

Securitisation involves pooling financial assets and issuing securities backed by their cash flows.

The proposal forms part of a consultation paper issued on Monday to amend the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, with a view to aligning the framework with the Reserve Bank of India's directions on securitisation of standard assets.

At present, Regulation 19A of the Regulations requires that the exposure to a single obligor shall not exceed 25% of the asset pool at the time of issuance. SEBI has proposed to exempt RBI-regulated entities from this requirement.

The consultation paper also seeks public comments on a series of proposals concerning RBI-regulated entities.

Currently, disclosure requirements are primarily cast on the originator. SEBI has proposed that such requirements may also be cast on the originator or the servicer.

With respect to governance, while the existing regulations allow multiple representatives of the originator on the Special Purpose Distinct Entity, SEBI has proposed to restrict the originator to one representative without voting rights.

The paper also notes that existing provisions restrict securitisation transactions between an originator and an SPDE belonging to the same group. SEBI has proposed to relax this restriction for RBI-regulated entities.

Further, with respect to winding up of securitisation transactions, SEBI has proposed that instead of mandating winding up schemes of the SPDE, provision may be made for the appointment of a new trustee in place of the existing trustee in cases where the trustee's registration is suspended or cancelled.

SEBI has invited public comments on the proposals, with the last date for submission being May 25, 2026.