RBI Extends Relaxation on the Guidelines to NBFCs on Securitisation Transactions

RBI Extends Relaxation on the Guidelines to NBFCs on Securitisation Transactions

• The Reserve Bank of India has decided to extend the ‘Relaxation on the guidelines to NBFCs on securitisation transactions’ till December 31, 2019.
• The “Relaxation on the guidelines to NBFCs on securitisation transactions” was issued on November 29, 2018 by RBI to be applicable till May 2019.

Relaxed Norms

• RBI has relaxed the minimum holding period (MHP) requirement for non-banking finance companies (NBFC) in respect of loans with maturity of over five year. 
• The lenders can now sell their loan pools or securitise them after holding them for six months on their books. (Earlier it was one year)
• To avail the relaxed norms by NBFC, RBI has also prescribed the Minimum Retention Requirement (MRR) of 20% of the fresh eligible loan portfolio instead of the regular norm of 10%.