Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025
UR
- Applies toCommercial banks
- StatusIn force
- IssuedNovember 28, 2025
- Amendmentsnone tracked
- Length38 points in 5 sections · 4 min read
The four dates on this rule
- PublishedNovember 28, 2025The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNovember 28, 2025The day this rule starts to apply, as RBI's own text states it.
- Time to get readyNoneIt starts to apply on the day it was published.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
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Numbers to remember
| 365 days | Banks cannot securitise loans that have less than 365 days left to run. RBI Para 5(4) |
| 24 months | For loans up to 24 months, banks must keep at least 5% of the loan value at stake. RBI Para 11(1) |
| 10 per cent | For loans of more than 24 months and bullet loans the originator keeps 10 per cent. RBI Para 11(2) |
| five per cent | For residential mortgage backed notes the originator keeps five per cent. RBI Para 12 |
| one crore rupees | The smallest securitisation note that may be issued is one crore rupees. RBI Para 27 |
| Rs 1 crore | Each investor must put in at least Rs 1 crore to buy securitisation notes. RBI Para 27 |
| 120 days | A warranty to replace an asset must be used within 120 days of the transfer. RBI Para 31(5) |
| seven years | Non-retail exposures need at least seven years of performance history. RBI Para 40 |
| 1 per cent | At the cut-off date no single borrower may be more than 1 per cent of the pool. RBI Para 73 |
| 50 per cent | Before the first reset at least 50 per cent of the principal must have been repaid. RBI Para 85 |
| 25 per cent | For residential mortgage backed deals the figure is 25 per cent. RBI Para 86 |
What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Chapter I. Preliminary
1. Securitisation rules for banks
This document sets the rules a commercial bank follows when it securitises loans.
Chapter II. General requirements for securitisation
Must know
1. 365-day loan floor
Banks cannot securitise loans that have less than 365 days left to run.
2. Overseas branches and FEMA
Securitising exposures of an overseas branch must not breach FEMA or its rules.
3. Five percent stake floor
For loans up to 24 months, banks must keep at least 5% of the loan value at stake.
BankPulse example. A bank securitises a pool of loans whose original maturity is 24 months. It must keep at least 5 per cent of the book value at stake. On a pool of one hundred crore rupees, that is five crore rupees.
4. Ten per cent retention
For loans of more than 24 months and bullet loans the originator keeps 10 per cent.
5. Ten percent stake floor
For longer loans or ones with bullet repayments, banks must keep at least 10% at stake.
6. Housing keeps five per cent
For residential mortgage backed notes the originator keeps five per cent.
7. No stake reduction
Banks cannot cut their required stake by hedging, selling or pledging it.
8. 20 percent deal cap
A bank's stake in one securitisation deal cannot exceed 20% of the notes issued.
9. One crore minimum ticket
The smallest securitisation note that may be issued is one crore rupees.
10. Minimum investor ticket
Each investor must put in at least Rs 1 crore to buy securitisation notes.
11. No control over the trust
The originator must not control the special purpose entity or its trustees.
12. No support for losses
The originator must not carry the losses of the special purpose entity.
13. One hundred twenty days
A warranty to replace an asset must be used within 120 days of the transfer.
Do it
14. Hold before you sell
The originator must have met the minimum holding period before securitising.
15. Tell the investors everything
Legal and financial risk information must be open to investors, on demand.
16. Listing threshold
Banks must list securitisation notes if fifty or more investors buy into one issue.
17. Arm's length dealing
Deals between a bank and its securitisation entity must be strictly at arm's length.
18. No interest in the trustees
The originator must hold no ownership or beneficial interest in the trustees.
Background
19. Bought loans carry the rule
Where the originator bought the loans, the rule also binds the lender it bought from.
20. Sell only for cash
The originator may sell assets to the entity only for cash, paid by transfer time.
Chapter III. Simple, transparent and comparable (STC) securitisations
1. Seven years of history
Non-retail exposures need at least seven years of performance history.
2. One per cent per obligor
At the cut-off date no single borrower may be more than 1 per cent of the pool.
3. Originator needs experience
The originator must have real experience of lending of the kind being securitised.
4. Sound underwriting throughout
Every claim in the pool must have been written on sound and prudent standards.
5. Retained tranches lose relief
A tranche the originator keeps does not get the simple and transparent treatment.
Chapter IV. Provision of facilities supporting securitisation structures
Must know
1. Half repaid before reset
Before the first reset at least 50 per cent of the principal must have been repaid.
2. A quarter for home loans
For residential mortgage backed deals the figure is 25 per cent.
3. Write down when it draws
The facility papers must say clearly when the facility may and may not be drawn.
4. Not the originator's shortfall
The originator must not cover a shortfall in liquidity support given by a third party.
Do it
5. Facility provider must be regulated
A facility provider must be regulated by at least one financial sector regulator.
6. Keep the cash flows apart
The servicer must hold the cash flows in trust and not mix them with its own.
Background
7. Same agency re-rates
Only the agency that first rated the deal may re-rate it for a reset.
8. Liquidity provider ranks first
Once a liquidity facility is drawn its provider ranks ahead of the senior tranche.
Chapter VI. Capital requirements for Securitisation exposures and Disclosures Norms
1. Third party data certified
Data taken from a third party must be certified by its auditors.
2. Capital rules apply
Capital for securitisation exposures follows the capital adequacy Directions.
3. Disclosure follows the accounts
Disclosure follows the financial statements Directions.
Chapter VII. Repeal and other provisions
1. Old actions preserved
Action already started under the old rules stays governed by those old rules.
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