CERSAI beyond SARFAESI – The multi-faceted effects of security interest registration

/0 Comments/in , , , , /by

– Sikha Bansal and Anirudh Grover | finserv@vinodkothari.com

Introduction

The rights of secured creditors are spread across various laws: common law, Companies Act, Insolvency and Bankruptcy Code (IBC) and the SARFAESI Act. In equal measure, the preconditions which are requisite to assert these rights are also spread over those very laws. 

It is lamentable that the security interest registration regime in India is fragmented, without any obvious sense of purpose or direction. This was discussed in our previous article Fragmented Framework for Perfection of Security Interest[1].

Read more →

Full Day Workshop on Partnering in lending (Mumbai)

/0 Comments/in , , , , , /by

Loan sourcing, co-lending, transfer of loans, securitisation

Please note that registration for the workshop is closed, thank you for the overwhelming support! Do express your interests by filling this form: https://forms.gle/qoUwx99aV1acELSp6
Loader Loading…
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

Download as PDF [430.70 KB]

Details of our workshop in Bengaluru: https://vinodkothari.com/2022/12/full-day-workshop-on-partnering-in-lending/

Our recent write-ups on the topic:

Financial Services- https://vinodkothari.com/category/financial-services

Digital Lending- https://vinodkothari.com/?s=digital+lending

The sale of season: Holding period requirements for assignments and securitisation

/0 Comments/in , , , , , /by

– Team Finserv | finserv@vinodkothari.com

Any sale or assignment or transfer, including securitisation, of loans is subject to a minimum seasoning with the originator. Under the extant regulatory provisions, such requirement is referred to as ‘Minimum Holding Period’ (MHP), which means the minimum period for which the originator should have held the loan exposures before the same is transferred to the transferee or Special Purpose Entity (SPE), as the case may be. This serves several purposes: that the loan was not originated for sale, the originator has had some equity in the loans, and that there is a benefit of hindsight of performance.

MHP requirements have always been a part of the regulations in India. However, on December 5, 2022, the Reserve Bank of India (RBI) made certain amendments to the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021[1] (‘TLE Directions’) as well as the Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021[2] (‘SSA Directions’). Among the other changes, there was a change in the MHP provisions; this change may have a significant impact on future transactions. 

This write-up intends to clarify the position with respect to the computation of MHP for different types of loans under TLE Directions as well as SSA Directions.

Read more →

RBI amends TLE Directions

/0 Comments/in , , , , /by

– Team Finserv | finserv@vinodkothari.com

The Reserve Bank of India (RBI) made certain amendments to the Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (‘TLE Directions’) on December 05, 2022. The long-awaited welcome move of allowing ARCs to acquire loans falling in 1-60 DPD as well is being well appreciated. Some of the changes seem to be creating a confusion; say not allowing foreign branches of Indian banks to acquire defaulted loans; while others, seem to be providing more clarity; such as clarifying that registration of security interest for the purpose of computing MHP shall mean registration of security interest with CERSAI only.

Read more →

Three significant changes in Securitisation Directions

/0 Comments/in , , , /by

Loans with less than 1 year to go cannot be securitised; Minimum holding period norms tweaked, may impact home loan securitisation

– Vinod Kothari | finserv@vinodkothari.com

On December 5, 2022, the RBI silently made some significant changes and updated the RBI (Securitisation of Standard Assets) Directions, 2021 (‘SSA Directions’). It is difficult to understand if these amendments are pursuant to some consultation, or feedback gathered from supervisory experience. The three significant changes seem to be mutually disconnected, though some of the amendments are related to the amendments made, on the same date, to the RBI (Transfer of Loan Exposures) Directions, 2021 (‘TLE Directions’) too.

We deal with the three amendments, and their implications, below:

Read more →

Full Day Workshop on Partnering in lending:

/0 Comments/in , , , , , /by

Loan sourcing, co-lending, transfer of loans, securitisation

Register here: https://forms.gle/Nq13Qf58uH3qge9D7

Venue: The Chancery Hotel, 10/6, Lavelle Road, Shanthala Nagar, Ashok Nagar, Bengaluru 560001 (location)

Loader Loading…
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

Download as PDF [424.10 KB]

Our upcoming workshops: https://vinodkothari.com/workshop-training/

Our resources:

Financial Services- https://vinodkothari.com/category/financial-services

Digital Lending- https://vinodkothari.com/?s=digital+lending

Guide to Structured Finance

/0 Comments/in , , , /by

Get your copy now!

Order here – https://rzp.io/l/R2RRY0P

A comprehensive treatise, running over 1000 pages, on four contemporary topics in structured finance.

Key highlights of the book:
– Delves deep to create fundamental understanding of the topic, evolving conceptual clarity.
– Discusses global practices, along with specific focus on Indian market.
– Blend of legal, accounting and regulatory discussions, while fully explaining the underlying financial structures.
– Evolution as well as temporal developments discussed, to allow readers to understand the trajectory and future path of the instruments.
– Sufficient discussion on structuring. Use of spreadsheet-based examples to provide practical understanding. Spreadsheets underlying the computations can be accessed on a URL.
Loader Loading…
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

Download as PDF [311.65 KB]

Stressed for reform: RBI proposes stressed assets securitisation and loss provisioning

/0 Comments/in , , , /by

– Team Finserv (finserv@vinodkothari.com)

Rating agency Standard and Poor’s recently noted that at least 60 percent of the world’s economies are either into recession already or heading towards the same. The same report notes that 29 of the 33 countries covered by the study have disorderly inflation above the targets set by the respective central banks[1]. OECD’s interim report of September, 2022 says that despite a boost in activity as COVID-19 infections drop worldwide, global growth is projected to remain subdued in the second half of 2022, before slowing further in 2023 to an annual growth of just 2.2%. This is accompanied by inflationary pressures in most countries[2]. India is one of the two countries projected to have a growth rate of more than 6%.

The RBI’s monetary policy, September, 2022, as expected, has announced an interest rate hike of 50 bps in the policy rates.

Read more →

The Law of Co-lending

/0 Comments/in , , , /by

Financial Services Division | finserv@vinodkothari.com

Loader Loading…
EAD Logo Taking too long?

Reload Reload document
| Open Open in new tab

Download as PDF [376.18 KB]

Our write-ups on related topics may be viewed here –

Broken Pledge? Apex Court reviews the law on pledges

/3 Comments/in , , , , /by

By Vinod Kothari, Managing Partner, Sikha Bansal, Partner and Shraddha Shivani, Executive | corplaw@vinodkothari.com

The Supreme Court ruling in  PTC India Financial Services Limited v. Venkateshwar Kari and Another is significant in many ways – not that it categorically rewrites the law of pledges which is settled with 150 years of the statute[1] and even longer history of rulings, but it surely refreshes one of the predicaments of a pledge. Importantly, since most of the pledges of securities currently are in the dematerialised format, it brings out a very important distinction between the meaning of ‘beneficial owner’ under the Depository law, and the right of the pledgee (a.k.a. pawnee or security interest holder) to cause the sale in terms of the rights arising under the pledge. Also, very importantly, the SC dwells upon the essential principle of equity of redemption in pledges and renders void any provision in the pledge agreement which allows the pledgee to make a sale of the pledged article without notice to the pledgor, or to forfeit the pledged article and convert the same as pledgee’s own property. There are also observations in the ruling that seem to give an indefinite time to the pledgee for the sale of the pledged property – this is a point that this article discusses at some length.

Read more →