GUIDELINES ON SECURITISATION OF STANDARD ASSETS
Requirements to be met by originating NBFCs :-
- All on-balance sheet standard assets are eligible for securitisation except followings :-
- Revolving credit facilities (e.g. Credit Card Receivables).
- Assets purchased from other entities.
- Securitisation exposures (e.g. Mortgage- backed/asset backed securities).
- Loans with bullet repayment of both principal & interest.
2. Total exposure of NBFCs to the loans securitised should not exceed 20% of the total securitised
instruments issued (If an NBFC exceeds the above limit, the excess amount would be risk
weighted at 667%).
Securitisation Activities/ Exposure not permitted
- Re-securitisation of Assets: Re-securitisation means a securitisation exposure in which the risk associated with an underlying pool of exposures is trenched and at least one of the underlying exposures is a securitisation exposure.
- Synthetic Securitisations: A synthetic securitisation is a structure with at least two different stratified risk positions or tranches that reflect different degrees of credit risk where credit risk of an underlying pool of exposures is transferred, in whole or in part, through the use of funded or unfunded credit derivatives or guarantees that serve to hedge the credit risk of the portfolio.
3. Securitisation with Revolving Structures: These involve exposures where the borrower is permitted to vary the drawn amount and repayments within an agreed limit under a line of credit (e.g. credit card receivables and cash credit facilities).