What changed
RBI clarified that existing disclosure requirements for SCs/RCs in SR offer documents explicitly include the date of acquisition, valuation of assets, and the SC/RC's interest in those assets at the time of SR issuance. This builds on earlier guidelines from 2003 and 2007.
What it means for you
SCs/RCs must now ensure their offer documents contain these three specific data points for each underlying asset. This enhances transparency for investors and reduces information asymmetry. Lenders investing in SRs can better assess the quality and timing of asset acquisition.
What you must do
- Update SR offer document templates to include date of acquisition, valuation, and SC/RC interest for each underlying asset.
- Verify that all past and future SR issuances comply with this clarified disclosure requirement.
- Train compliance teams on the specific data points required in offer documents.
- Review existing SR disclosures for gaps and rectify before next issuance.
Who it affects
Registered Securitisation Companies (SCs), Registered Reconstruction Companies (RCs), Investors in Security Receipts (SRs), Compliance officers at SCs/RCs
What specific disclosures are now required in SR offer documents?
SCs/RCs must disclose the date of acquisition of each underlying asset, its valuation, and the SC/RC's own interest in that asset at the time of issuing the SR.
Does this circular apply to all SR issuances?
Yes, it applies to all Security Receipts issued by registered SCs/RCs, as it clarifies existing guidelines from 2003 and 2007.
What happens if an SC/RC fails to include these disclosures?
Non-compliance may lead to regulatory action by RBI, as the circular mandates these disclosures to enable informed investment decisions.