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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Non-Banking Financial Companies- Securitisation Transactions) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/353 DOR.STR.REC.272/21.04.177/2025-26

RBI has issued RBI (Non-Banking Financial Companies - Securitisation Transactions) Directions, 2025 effective from 28th November 2025. Key Highlights: 1. Applicability - Applicable to major categories of NBFCs (NBFC-D, NBFC-ICC, NBFC-MFI, NBFC-Factor, HFCs, etc.). Certain NBFC classes such as NBFC-P2P, NBFC-AA, CICs, and Base Layer NBFCs without public funds are excluded. 2. Eligible and Ineligible Assets - Only standard (performing) loans that meet minimum holding period can be securitised. Re-securitisations, synthetic securitisations, revolving credit like credit cards, and loans below 365 days maturity are not allowed (with limited exceptions). 3. Minimum Retention Requirement (MRR) - Originators must retain a minimum stake (5% or 10% depending on loan maturity). They cannot hedge or sell the retained portion. 4. Structure and Transparency - Payment waterfall, triggers, loan-level data, and all rights of investors must be clearly disclosed. Any change that affects investors must be communicated within 14 days. 5. Support Facilities (Credit Enhancement, Liquidity, Underwriting, Servicing) - NBFCs and other regulated entities may provide these facilities, but only under strict conditions. Credit enhancements must be upfront, limited, and fully transparent. Liquidity support cannot cover credit losses. 6. Requirements for NBFC Investors - NBFCs investing in securitised notes must perform thorough due diligence, understand the pool, assess risk, review originator's track record, and conduct stress testing. 7. Capital & Accounting Rules - Losses/profits from sale must follow applicable accounting standards (Ind AS or otherwise). Unrealised gains like I/O strips cannot be booked as income until received. For more information, please refer to the attached document.

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