Report outlines the strategic implications and operational mandates stemming from the Reserve Bank of India’s draft Amendment Directions issued on July 27, 2026. As detailed in the official press release, these amendments aim to drastically improve efficiency, liquidity, and transparency in the issuance and subsequent transfer of Securitisation Notes (SNs).
The regulatory update introduces four specific sets of directions tailored to different financial entities.
1. Commercial Banks
Ref: Reserve Bank of India (Commercial Banks Securitisation Transactions) Amendment Directions, 2026
Applicable Entity
All Scheduled Commercial Banks (SCBs), excluding Regional Rural Banks (RRBs).
Specific Changes Required
- Mandatory Dematerialisation: All new Securitisation Notes (SNs) must be issued exclusively in dematerialised (Demat) form. Physical certificates are strictly prohibited.
- Exchange Listing: Mandatory listing on recognized stock exchanges (NSE/BSE) for any SN issuance tranches exceeding ₹100 crore to foster secondary market liquidity.
- T+1 Trade Reporting: All secondary market transfers of SNs must be reported to a recognized Trade Repository (like CCIL) within T+1 working days.
💡 Real-World Example
State Bank of India (SBI) packages a ₹500 crore portfolio of corporate term loans into Securitisation Notes. Under the new draft, SBI cannot issue physical certificates to mutual funds buying these notes. The notes must be credited directly to the investors’ demat accounts, listed on the NSE debt segment, and every subsequent secondary trade between funds must be reported to CCIL by the next business day.
Management Action Plan
- IT Systems Upgrade: Integrate Treasury Management Systems (e.g., Murex, TCS BaNCS) via API with depositories (NSDL/CDSL) and CCIL for seamless Demat issuance and automated T+1 trade reporting.
- Legal & Documentation: Update standard Term Sheets and Special Purpose Vehicle (SPV) formation documents to include listing clauses and depository agreements.
- Compliance Training: Conduct immediate training for the treasury back-office to ensure zero slippage on the strict T+1 reporting timeline to avoid regulatory penalties.
2. Small Finance Banks (SFBs)
Ref: Reserve Bank of India (Small Finance Banks Securitisation Transactions) Amendment Directions, 2026
Applicable Entity
All Small Finance Banks registered under the Banking Regulation Act, 1949.
Specific Changes Required
- Granular Disclosure Templates: Mandatory use of newly standardized disclosure templates specifically tailored for granular pools like microfinance (JLG loans) and small business loans.
- Easing of MHP for QIBs: Relaxation of Minimum Holding Period (MHP) restrictions for subsequent transfers of SNs by Qualified Institutional Buyers (QIBs) to boost secondary market velocity.
- Mandatory Pool Ratings: Strict requirements for dual credit ratings from recognized agencies for any SN issuance targeted at institutional investors.
💡 Real-World Example
Ujjivan Small Finance Bank securitises a ₹200 crore pool of Joint Liability Group (JLG) loans. Previously, buyers of these SNs faced stringent lock-ins. The new amendment allows an institutional investor (like an Insurance firm) that bought these SNs to seamlessly sell them to a Mutual Fund without heavy lock-in penalties, significantly boosting the attractiveness and liquidity of SFB-originated papers.
Management Action Plan
- Data Infrastructure Revamp: Overhaul MIS and data extraction scripts to automatically map core banking data to the new RBI-mandated granular disclosure templates for micro-loans.
- Rating Agency Partnerships: Establish retainer contracts with at least two major credit rating agencies (e.g., CRISIL, ICRA) to ensure rapid turnaround times for dual-rating of securitised pools.
- Treasury Marketing: Actively pitch the “enhanced liquidity” aspect of SFB-originated SNs to a broader base of QIBs, leveraging the relaxed holding period rules to negotiate better pricing.
3. Non-Banking Financial Companies (NBFCs)
Ref: Reserve Bank of India (Non-Banking Financial Companies Securitisation Transactions) Amendment Directions, 2026
Applicable Entity
All registered NBFCs (including Housing Finance Companies, Investment and Credit Companies, etc.).
Specific Changes Required
- Independent Fiduciary Oversight: Mandatory appointment of a SEBI-registered independent Debenture Trustee (or equivalent fiduciary) to oversee the SPV and protect SN holders’ interests.
- Enhanced Asset Quality Transparency: Requirement for automated, monthly reporting on underlying pool asset quality metrics (Loan-to-Value, Days Past Due (DPD), prepayment rates) directly to SN holders.
- Stricter Pool Selection: Tighter norms preventing the inclusion of any restructured or SMA-2 (Special Mention Account) loans in the initial securitisation pool.
💡 Real-World Example
Bajaj Finance issues SNs backed by a massive pool of consumer durable loans. Under the amendment, they can no longer just provide internal reports; they must appoint an independent trustee. This trustee independently verifies the pool’s health monthly—ensuring that if a segment of the portfolio hits 90+ DPD, those assets are provisioned for or replaced exactly as per the SPV contract, providing high safety for investors.
Management Action Plan
- Vendor Onboarding: Immediately empanel reliable SEBI-registered debenture trustees. Negotiate Service Level Agreements (SLAs) and budget for the new ongoing trustee fees.
- Investor Portal Development: Develop an automated digital investor portal or secure API feed that pushes real-time or monthly pool performance metrics (DPD, collections) directly to investors and the trustee.
- Credit & ALM Policy Update: Hardcode validation rules in the loan origination/selection systems to strictly filter out any SMA-2 or restructured assets before they can be flagged for a securitisation pool.
4. All India Financial Institutions (AIFIs)
Ref: Reserve Bank of India (All India Financial Institutions Securitisation Transactions) Amendment Directions, 2026
Applicable Entity
Institutions including EXIM Bank, NABARD, NHB, SIDBI, and NaBFID.
Specific Changes Required
- Market Making Framework: A newly introduced operational framework allowing AIFIs to act as designated “Market Makers” for SNs, specifically in priority sectors like agriculture, housing, and MSMEs.
- Standardization for Cross-Border Investment: Standardization of SN issuance structures to align with global norms, facilitating easier cross-border investments and Foreign Portfolio Investor (FPI) participation.
💡 Real-World Example
SIDBI is authorized to act as a market maker for SNs backed by MSME loans. When a smaller regional bank or mutual fund urgently wants to sell its MSME-backed SNs, SIDBI provides a continuous two-way quote (a buy and sell price). This ensures the investor can exit when needed, eliminating liquidity risk and heavily incentivizing more banks to lend to MSMEs.
Management Action Plan
- Trading Desk Setup: Allocate dedicated internal capital and set up a specialized trading desk authorized for market-making activities in designated SNs.
- Algorithmic Pricing Deployment: Develop and deploy dynamic pricing models that can offer real-time two-way quotes based on prevailing interest rates, pool credit spreads, and overarching market liquidity.
- FEMA Integration: Coordinate with RBI and update internal compliance frameworks to handle foreign exchange regulations (FEMA) seamlessly, enabling smooth FPI participation in AIFI-backed structures.
Action Required: Feedback Submission
As per the RBI directive, all stakeholders and respective compliance departments must review these draft guidelines and submit their comments/feedback by August 27, 2026. Submissions can be made via the ‘Connect2Regulate’ portal on the RBI website or emailed directly to the Chief General Manager, Credit Risk Group, Department of Regulation.