On November 26, 2018, the Reserve Bank of India (“RBI”) issued a circular on ‘Relaxation on the guidelines to NBFCs on securitisation transactions’ (“Circular”) to relax the norms for non-banking financial companies (“NBFCs”) to securitise their loan books. As per the Circular, NBFCs have been permitted to securitise loans of over five-year maturity after holding them for six months on their books, subject to the condition that the minimum retention requirement for such securitisation/assignment transactions shall be 20% of the book value of the loans being securitised/ 20% of the cash flows from the assets assigned.
Further, the above relaxation shall only be applicable to securitisation/assignment transactions carried out during a period of 6 months from the date of the Circular.
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