RBI has decided to further extend the Relaxation on the guidelines to NBFCs on securitisation transactions till December 31, 2019. Earlier, the relaxation was given till 29th May, 2019.
As per Master Directions on NBFC- Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions dated September 01, 2016, Minimum holding Period (MHP) was prescribed for all NBFCs were required to hold loans in their books after which only securitisation will be permitted. Master Direction on NBFC-Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions dated September 01, 2016, prescribes a Minimum Retention Requirement (MRR) to ensure that the originating NBFCs have a continuing stake in the performance of securitised assets.
In order to encourage NBFCs to securitise/assign their eligible assets, RBI had earlier relaxed the MHP requirements subject to Maintenance of prescribed MRR. MHP requirement for originating NBFCs, in respect of loans of original maturity above 5 years was relaxed to receipt of repayment of six monthly instalments or two quarterly instalments (as applicable), subject to the prudential requirement of MRR. To avail relaxation, MRR for such securitisation/assignment transactions must be 20% of the book value of the loans being securitised or, 20% of the cash flows from the assets assigned.
This relaxation of MHP has further been extended till 31st December, 2019.
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