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

Reserve Bank of India of India (Non-Banking Financial Companies - Transfer and Distribution of Credit Risk) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/352 DOR.STR.REC.271/21.04.048 /2025-26

RBI has issued Reserve Bank of India of India (Non-Banking Financial Companies - Transfer and Distribution of Credit Risk) Directions, 2025, effective from 28th Nov 2025.
Applicability: These directions apply to NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC, and HFCs (paragraph-wise applicability).
Key Highlights:
- The Directions reaffirm the principle that all loan transfers must represent a complete and irrevocable transfer of credit risk and economic interest. Any form of implicit support or retention of control invalidates the transfer for regulatory capital purposes.
- NBFCs are permitted to transfer standard assets through securitisation, direct assignment, and other eligible structures.
- Key safeguards include Minimum Holding Period (MHP), Minimum Risk Retention (MRR), Restrictions on re-securitisation, and Capital treatment based on demonstrated Significant Credit Risk Transfer (SCRT).
- The Directions provide detailed rules for transferring NPAs and SMA accounts, including Use of independent valuation, Structuring of transactions with ARCs and other regulated entities, Constraints on recourse arrangements, and Immediate derecognition from books upon true sale.
- Originating NBFCs are barred from offering any form of implicit support to securitisation vehicles.
Any breach requires reporting to RBI, Adjustments to capital adequacy, and Possible supervisory action.
- NBFCs must provide enhanced disclosures on Pool-level data, Credit enhancements, Stress-test results, and Investor reporting timelines.

For more information, kindly refer to the attached document.

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