Details of the 11th Securitisation Summit – https://vinodkothari.com/secsummit/
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Post-event report of the 10th Securitisation Summit – https://vinodkothari.com/2022/05/key-takeaways-10th-securitisation-summit-may-27-2022-the-lalit-mumbai/
For queries regarding participation, partnership or anything else, reach us at: summit@vinodkothari.com / fintrain@vinodkothari.com
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– Vinod Kothari | finserv@vinodkothari.com
It has been a brisk year in terms of activity – a busy regulator kept all regulated entities busier. This year marked the initiation of a new SBR framework for NBFCs – hence there was a lot of buzz in terms of understanding the new regulatory framework. The names of 16 Upper layer entities were declared by the RBI – consisting of 5 HFCs, 10 NBFC-ICCs, one CIC[1]. As is the design, UL entities are treated at par with banks in terms of regulatory intensity –hence, there is a LEF (large exposure framework), differential provisioning norms in case of standard assets, CET-1 capital requirement, mandatory listing etc.
Read more →– 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 →– 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 →-Kanakprabha Jethani (kanak@vinodkothari.com)
A crucial feature of the financial sector industry is that the services provided by financial institutions, including the interest rates charged, are not identical and hence, the customer has a choice to approach the lender whose offerings suit the needs of the customer. The choice is influenced by various factors including the ease of onboarding process, information sought, interest and charges levied, customer redressal mechanism etc. In the lending industry, given the options available with the borrower, it has been a common practice to move to new lenders when they provide more favourable terms. Read more →
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