Listed and Restricted? Additional Compliances and Prohibitions for listing of SDIs by RBI regulated Originators
– Payal Agarwal & Dayita Kanodia (finserv@vinodkothari.com)
Securitisation Transactions in India are primarily governed by:
- The RBI Securitisation of Standard Assets Directions, 2021 (in case the originator is regulated by RBI)
- SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, which become applicable if the securitisation notes are listed.
Consequently, an RBI regulated originator will be required to adhere to both the SSA Directions as well as the SDI Framework in case it intends to go for listing of the securisation notes.
Here, we have discussed the additional prohinitions and compliance requirements for RBI regulated originators which becomes applicable in case of listing of securitisation notes.
| Additional Prohibitions under the SEBI SDI Framework for RBI Regulated Originators | |||
| Para Ref | Relevant Regulatory Provision | Our Comments | |
| Single Asset Securitisation not permitted | 19A(a) | “No obligor shall have more than twenty-five percent in asset pool at the time of issuance.” | An RBI regulated originator will not be able to undertake single asset securitisation if it intends to list the securitisation notes, though the same is permitted under the RBI regulations (proviso to para 5(s) of the SSA Directions). Comments: Single asset securitisation is not a very common practice, but this is explicitly permitted under RBI regulations |
| All assets to be homogenous | 19A(b) | “Assets comprising the securitisation pool shall be homogeneous.” | The RBI SSA Directions only require the assets to be homogeneous in case of simple, transparent, and comparable securitisation transactions (STC Transactions). STC transactions are currently not very common, and in any case, is an investor classification, not that of issuer.For non-STC cases, there is no such requirement. Therefore, originators will be required to ensure that the assets comprising the pool are homogeneous in case they intend to go for listing of the securitisation notes. Comment: Homogeneity may be subjective |
| SPV can only be constituted in the form of a trust | 9(1) | “The special purpose distinct entity shall be constituted in the form of a trust the constitutional document whereof entitles the trustees to issue securitised debt instruments.” | The RBI SSA Directions (para 5(w)) allow SPVs to be constituted in the form of a company, trust or other entity. Comment: Not a very big pain, as SPVs in India are almost always in the trust form. |
| Originator and Trustee not be under the same group or control. | 10(3) | “No special purpose distinct entity shall acquire any debt or receivables from any originator which is part of the same group or which is under the same control as the trustee.” | This requirement, although essential to maintain independence, is not a part of the RBI SSA Directions. Accordingly, the same will be required to be ensured. |
| Additional Compliances applicable to RBI regulated Originators under the SEBI SDI Framework | |||
| Para Ref | Relevant Regulatory Provision | Our Comments | |
| Registration of Trustees under the Securities and Exchange Board of India(Debenture Trustees) Regulations, 1993 | 4(b) | “(1) On and from the commencement of these regulations, no person shall make a public offer of securitised debt instruments or seek listing for such securitised debt instruments unless –XX(b)all its trustees are registered with the Board under 26[the Securities and Exchange Board of India(Debenture Trustees) Regulations, 1993];XX” | Accordingly, the trustees will be required to comply with the SEBI Debenture Trustee regulations. Comment: This is a useful provision, and mostly, the SPV trustees are registered debenture trustees. Hence, it is a useful regulatory requirement. |
| Contents of the Instrument of Trust | Schedule IV | Schedule IV of the SEBI SDI Framework prescribes the minimum contents of the instrument of trust. | The contents prescribed under the SDI Framework are more detailed as compared to the RBI SSA Directions, which only indicate the contents of the trust deed. Comment: Useful regulation, serving the purpose of proper disclosures. Notably, disclosures are the domain of the securities regulator. |
| Quarterly reports to the trustee about the performance of the underlying pool and auditor certificate | 10A(1) and (2) | “(1) The originator shall provide the periodic reports to the trustee regarding the performance of the underlying asset pool, at least on a quarterly basis. (2) The originator shall provide a certificate from its auditor (s) regarding the disclosures of underlying asset pool assigned to the securitization trust, as made by the originator, on quarterly basis.” | The RBI SSA Directions (para 114 and 115) require semi-annual disclosures to be made. Further, there is no requirement to provide an auditor’s certificate under the RBI Directions. Comment: Useful regulation, serving the purpose of investor information. These disclosures are typically part of the securities regulators’ domain. |
| Minimum Ticket Size for subsequent transfers | 30A(2)(i) | “The minimum ticket size for subsequent transfers of a securitised debt instrument shall be as follows:(i)for originators which are not regulated by the Reserve Bank of India, the minimum ticket size shall be rupees one crore.” | In case of public offer of SDIs, the minimum ticket size is Rs. 1 Crore even for subsequent transfers of SDIs. This requirement is more stringent as compared to the RBI SSA Directions (para 28), which only requires the minimum ticket size of Rs. 1 Crore to be seen at the time of issuance. Comments: The requirement has only been introduced for the public offer of SDIs. Public issue of SDIs is howe,ver not a common practice currently. Accordingly, this may not seem to be a major concern for RBI regulated originators. |
| Other miscellaneous provisions – offer period, allotment period, dematerialisation | 29, 31(1) | Offer Period: No public offer of securitised debt instruments shall remain open for less than two working days and more than ten working days. Allotment Period:The securitised debt instruments shall be allotted to the investors within five days of closure of the offer. Further, the securitises will need to be issued mandatorily in demat form. | Comments: These requirements are applicable only in case of public offers. |
| Facility to avail electronic bidding platform | Master Circular dated May 16, 2025 | On issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper and on Review of provisions pertaining to Electronic Book Provider (EBP) platform to increase its efficacy and utility | The facility of using EBP has been extended to SDIs too. Comment: This is an optional facility, and as of now, very limited issuers have made use of this. |
| LODR Requirements – Chapter III | |||
| Disclosure by KMPs, directors, etc | Reg 5 | 5. The listed entity shall ensure that key managerial personnel, directors, promoters or any other person dealing with the listed entity, complies with responsibilities or obligations, if any, assigned to them under these regulations 51[:]52[Provided that the key managerial personnel, directors, promoter, promoter group or any other person dealing with the listed entity shall disclose to the listed entity all information that is relevant and necessary for the listed entity to ensure compliance with the applicable laws.] | This requires the concerned officers of the Listed Entity (in this case, the SPV] to make requisite disclosures for the purpose of complying with the law. Comment: Does not seem to be practically relevant, as Originators’ KMPs mostly do not have interest in the SPV. However, where needed, it is a useful disclosure. |
| Compliance officer to be appointed. | Reg 6, Chap III | 6. (1) A listed entity shall appoint a qualified company secretary as the compliance officer Other provisions of the regulation | An issuer of SDIs is required to appoint a Compliance Officer. Comments: The requirement may be complied with at SPV level. |
| Share Transfer Agent | Reg 7 | (1)The listed entity shall appoint a share transfer agent or manage the share transfer facility in-house:Other requirements of the regulation | The requirement to appoint a share transfer agent is typically part of the securities regulators’ domain. Comment: Mostly not relevant as the securities are offered in demat form. |
| Information to intermediaries | Reg 8 | The listed entity, wherever applicable, shall co-operate with and submit correct and adequate information to the intermediaries registered with the Board such as credit rating agencies, registrar to an issue and share transfer agents, debenture trustees etc, within timelines and procedures specified under the Act, regulations and circulars issued there under:Provided that requirements of this regulation shall not be applicable to the units issued by mutual funds listed on a recognised stock exchange(s) for which the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 shall be applicable. | Requirement to share information with the information agencies. Comment: In case of listed SDIs, this is a part of the information eco system. |
| Policy for preservation of documents | Reg 9 | The listed entity shall have a policy for preservation of documents, etc. | Useful for preservation of documents. |
| Filing of reports, statements and other documents | Reg 10 | (1) The listed entity shall file the reports, statements, documents, filings and any other information with the recognised stock exchange(s) on the electronic platform as specified by the Board or the recognised stock exchange(s).Other provisions of the regulation | This is a general filing requirement for filing of information on the stock exchanges. |
| Scheme of arrangement to not violate, affect or override the provisions of securities law | Reg 11 | The listed entity shall ensure that any scheme of arrangement /amalgamation /merger /reconstruction /reduction of capital etc. to be presented to any Court or Tribunal does not in any way violate, override or limit the provisions of securities laws or requirements of the stock exchange(s):. | Mostly not relevant for SDIs |
| Use of electronic mode of payments | Reg 12 | The listed entity shall use any of the electronic mode of payment facility approved by the Reserve Bank of India, in the manner specified in Schedule I, for the payment of the following:(a) dividends;(b) interest;(c) redemption or repayment amounts: | Provides for mode of payments to investors. Not a cumbersome requirement as it refers to RBI-permitted payment systems to be used. |
| SCORES | Reg 13 | (1) 61[The listed entity shall redress investor grievances promptly but not later than twenty-one calendar days from the date of receipt of the grievance and in such manner as may be specified by the Board.]Other provisions of the Regulation | This relates to use of the SCORES mechanism for settling investor issues |
| Payment of Fees and charges | Reg 14 | The listed entity shall pay all such fees or charges, as applicable, to the recognised stock exchange(s), in the manner specified by the Board or the recognised stock exchange(s). | This mandates payment of listing fees. Usual provision for all listed securities |
| LODR Regulations – Chapter VIII | |||
| The entire Chapter is dedicated to listed SDI issuance. | Reg 81 | Applicability(1) The provisions of this chapter shall apply to Special Purpose Distinct Entity issuing securitised debt instruments and trustees of Special Purpose Distinct Entity shall ensure compliance with each of the provisions of these regulations.(2) The expressions “asset pool”, “clean up call option”, “credit enhancement”, “debt or receivables”, “investor”, “liquidity provider”, “obligor”, “originator”, “regulated activity”, “scheme”, “securitization”, “securitized debt instrument”, “servicer”, “special purpose distinct entity”, “sponsor” and “trustee” shall have the same meaning as assigned to them under [Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008]555; | Specifies applicability of the Chapter and refers to meaning of relevant expressions |
| Intimation and filings with stock exchange(s) | Reg 82 | (1) The listed entity shall intimate the Stock exchange, of its intention to issue new securitized debt instruments either through a public issue or on private placement basis (if it proposes to list such privately placed debt securities on the Stock exchange) prior to issuing such securities.(2) The listed entity shall intimate to the stock exchange(s), at least two working days in advance, excluding the date of the intimation and date of the meeting, regarding the meeting of its board of trustees, at which the recommendation or declaration of issue of securitized debt instruments or any other matter affecting the rights or interests of holders of securitized debt instruments is proposed to be considered.(3) The listed entity shall submit such statements, reports or information including financial information pertaining to Schemes to stock exchange within seven days from the end of the month/ actual payment date, either by itself or through the servicer, on a monthly basis in the format as specified by the Board from time to time:Provided that where periodicity of the receivables is not monthly, reporting shall be made for the relevant periods.(4) The listed entity shall provide the stock exchange, either by itself or through the servicer, loan level information, without disclosing particulars of individual borrowers, in manner specified by stock exchange. | This regulation is equivalent of reg 29 in case of listed equities, and provides for prior intimation to investors for certain critical actions on the part of issuers. |
| Disclosure of information having bearing on performance/operation of listed entity and/or price sensitive information | 83 read with Part D of Schedule III | (1) The listed entity shall promptly inform the stock exchange(s) of all information having bearing on the on performance/operation of the listed entity and price sensitive information.(2) Without prejudice to the generality of sub-regulation(1), the listed entity shall make the disclosures specified in Part D of Schedule III.Explanation.- The expression ‘promptly inform’, shall imply that the stock exchange must be informed must as soon as practically possible and without any delay and that the information shall be given first to the stock exchange(s) before providing the same to any third party. | This regulation is to ensure the regular flow of information from issuers to investors, to maintain information symmetry. This is typical for all listed securities – for example, Reg 30 in case of listed equities, and reg 51 in case of listed non convertible debt securities. |
| Credit Rating to be periodically reviewed and any revision to be notified | Reg 84 | (1) Every rating obtained by the listed entity with respect to securitised debt instruments shall be periodically reviewed, preferably once a year, by a credit rating agency registered by the Board.(2) Any revision in rating(s) shall be disseminated by the stock exchange(s). | This Regulation requires a mandatory annual review of credit ratings on the SDIs by a SEBI-registered CRA, and intimation of any revision to the stock exchanges. |
| Information to Investors | Reg 85 | (1) The listed entity shall provide either by itself or through the servicer, loan level information without disclosing particulars of individual borrower to its investors.(2) The listed entity shall provide information regarding revision in rating as a result of credit rating done periodically in terms of regulation 84 above to its investors.(3) The information at sub-regulation (1) and (2) may be sent to investors in electronic form/fax if so consented by the investors.(4) The listed entity shall display the email address of the grievance redressal division and other relevant details prominently on its website and in the various materials / pamphlets/ advertisement campaigns initiated by it for creating investor awareness. | This clause requires certain pool level information; useful information for the poolComment: As in case of other jurisdictions, the disclosure requirements are typically laid by the securities regulations |
| Terms of Securitized Debt Instruments | Reg 86 | (1) The listed entity shall ensure that no material modification shall be made to the structure of the securitized debt instruments in terms of coupon, conversion, redemption, or otherwise without prior approval of the recognised stock exchange(s) where the securitized debt instruments are listed and the listed entity shall make an application to the recognised stock exchange(s) only after the approval by Trustees.(2) The listed entity shall ensure timely interest/ redemption payment.(3) The listed entity shall ensure that where credit enhancement has been provided for, it shall make credit enhancement available for listed securitized debt instruments at all times.(4) The listed entity shall not forfeit unclaimed interest and principal and such unclaimed interest and principal shall be, after a period of seven years, transferred to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009.(5) Unless the terms of issue provide otherwise, the listed entity shall not select any of its listed securitized debt instruments for redemption otherwise than on pro rata basis or by lot and shall promptly submit to the recognised stock exchange(s) the details thereof.(6) The listed entity shall remain listed till the maturity or redemption of securitised debt instruments or till the same are delisted as per the procedure laid down by the BoardProvided that the provisions of this sub-regulation shall not restrict the right of the recognised stock exchange(s) to delist, suspend or remove the securities at any time and for any reason which the recognised stock exchange(s) considers proper in accordance with the applicable legal provisions. | This requires prior approval of the stock exchange to be obtained for making any material modification to the structure of SDIs. It also requires the originator to ensure timely payments of interest and for the credit enhancement to be available at all times. |
| Record Date | Reg 87 | (1) The listed entity shall fix a record date for payment of interest and payment of redemption or repayment amount or for such other purposes as specified by the recognised stock exchange(s).(2) The listed entity shall give notice in advance of atleast seven working days (excluding the date of intimation and the record date) to the recognised stock exchange(s) of the record date or of as many days as the Stock Exchange may agree to or require specifying the purpose of the record date. | This is for fixation of record date for payouts; useful for investor decisions for entry or exit. |
| Disclosure of Information having bearing on performance/ operation of listed entity and/ or price sensitive information | Part D of Schedule III | Several disclosure requirements for significant events and developments | See comments under reg 83 |
Other Resources: Buy our book on Securitised Debt Instruments here.
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