Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025
RBI master-direction RBI/DOR/2025-26/328 · 28 Nov 2025
RBI master-direction RBI/DOR/2025-26/328 · 28 Nov 2025
Summary
Check the official recordThe Reserve Bank of India issued these Directions to regulate securitisation transactions by All India Financial Institutions (AIFIs). The framework defines eligible assets, minimum retention requirements (MRR), and origination standards. It mandates that originators maintain a continuing stake in securitised assets. The Directions establish criteria for Simple, Transparent, and Comparable (STC) securitisations to qualify for alternative capital treatment. AIFIs must perform due diligence, stress testing, and ongoing credit monitoring for securitisation exposures. The rules also govern the provision of supporting facilities, such as credit enhancement and liquidity facilities, and require specific disclosures to investors and the Reserve Bank. These Directions apply to EXIM Bank, NABARD, SIDBI, NHB, and NaBFID, effective from the date of publication on the official website.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/328 DOR.STR.REC.247/21.04.177/2025-26 November 28, 2025
Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025
Table of Contents
Chapter I - Preliminary
A. Short title and commencement
B. Applicability
C. Definitions
Chapter II - General requirements for securitisation
A. Assets eligible for securitisation
B. Minimum Retention Requirement (MRR)
C. Origination Standards
D. Payment priorities and observability
E. Limit on Total Retained Exposures by Originators
F. Issuance and Listing
G. Conditions to be satisfied by the special purpose entity
H. Representations and Warranties
I. Accounting Provisions
Chapter III - Simple, transparent and comparable (STC) securitisations
A. STC Securitisations- Criteria for regulatory capital purposes
B. Disclosure and Prudential Oversight for STC Securitisations
Chapter IV - Provision of facilities supporting securitisation structures
A. General Conditions
B. Credit Enhancement Facilities
C. Reset of credit enhancements
D. Liquidity Facilities
E. Underwriting Facilities
F. Servicing Facilities
Chapter V- Requirements to be met by an AIFI who is an investor in securitisation exposures
A. Due Diligence Requirements
B. Stress Testing
C. Credit monitoring and valuation
Chapter VI - Capital requirements for securitisation exposures and Disclosures Norms
A. Capital requirements for securitisation exposures
B. Disclosures
Chapter VII - Repeal and Other Provisions
A. Repeal and saving
B. Application of other laws not barred
C. Interpretations
Annex I
Introduction
Securitisation involves transactions where credit risk in assets are redistributed by repackaging them into tradeable securities with different risk profiles which may give investors of various classes access to exposures which they otherwise might be unable to access directly. While complicated and opaque securitisation structures could be undesirable from the point of view of financial stability, prudentially structured securitisation transactions can be an important facilitator in a well-functioning financial market in that it improves risk distribution and liquidity of lenders in originating fresh loan exposures.
Accordingly, in exercise of the powers conferred under Section 45L of the Reserve Bank of India Act, 1934, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest and in the interest of banking policy so to do, hereby, issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025.
These Directions shall come into effect on the day these are placed on the official website of the Reserve Bank of India.
(1) “bankruptcy remote" means the unlikelihood of an entity being subjected to voluntary or involuntary bankruptcy proceedings, including by the originator or the creditors to the originator;
(2) “clean-up call” means an option that permits the originator to call the underlying exposures or the securitisation exposures when the outstanding value of the underlying exposures falls below a pre-defined threshold, thereby extinguishing the remaining securitisation exposures of all parties;
(3) “credit enhancement” means a contractual arrangement in which an entity mitigates the credit risk associated with a securitisation exposure and, in substance, provides some degree of added protection to other parties to the transaction so as to mitigate the credit risk of their securitisation exposures;
(4) “early amortisation provision” means a mechanism that, once triggered, accelerates the reduction of the investor’s interest in underlying exposures of a securitisation structure and allows investors to be paid out prior to the originally stated maturity of the securitisation notes issued;
(5) “excess spread (or future margin income)” means the difference between the gross finance charge collections and other income received by the special purpose entity (SPE), and securitisation notes interest, servicing fees, charge-offs, and other senior SPE expenses.
(6) “exposure amount” of a securitisation exposure means the sum of the on-balance sheet amount of the exposure, or carrying value – which takes into account purchase discounts and writedowns/specific provisions the AIFI took on this securitisation exposure – and the off-balance sheet exposure amount, where applicable.
(7) "first loss facility" means the first level of financial support provided by the originator or a third party to improve the creditworthiness of the securitisation notes issued by the SPE such that the provider of the facility bears the part or all of the risks associated with the assets held by the SPE;
(8) “implicit support” means the protection arising when an AIFI provides support to a securitisation in excess of its predetermined contractual obligation;
(9) “interest-only strip (I/O)” means an on-balance sheet asset of the originator that represents a valuation of cash flows related to future margin income;
Provided that if the interest-only strip is subordinated, it shall serve the purpose of credit enhancement and shall be referred to as credit-enhancing interest-only strip.
(10) “Lenders” shall mean the following entities unless specifically mentioned otherwise:
(i) Scheduled Commercial Banks (excluding Regional Rural Banks);
(ii) All India Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI);
(iii) Small Finance Banks (as permitted under
Reserve Bank of India (Small Finance Banks – Securitisation Transactions) Directions, 2025
); and,
(iv) All Non-Banking Financial Companies (NBFCs) including Housing Finance Companies (HFCs).
(11) “mortgage backed securities” mean securitisation notes issued by the special purpose entity against underlying exposures that are all secured by commercial or residential real estate mortgages;
(12) "originator" refers to a lender that transfers from its balance sheet a single asset or a pool of assets to an SPE as a part of a securitisation transaction and would include other entities of the consolidated group to which the lender belongs;
Explanation: Originator may not be the same lender which had initially sanctioned one or more of the exposures underlying a securitisation transaction since loans purchased from lenders can also be sold to SPEs for the purpose of securitisation.
(13) “overcollateralisation” means any form of credit enhancement by virtue of which underlying exposures are posted in value which is higher than the value of the securitisation notes;
(14) “replenishment” means the process of using the cash flows from the securitised assets to acquire more assets in the manner disclosed upfront in the prospectus of the scheme, which will continue for a pre-announced replenishment period, following which the securitisation structure switches to an amortising one;
Provided that assets purchased during the replenishment period shall be purchased from the same originator(s) of the assets underlying the securitisation notes already issued under the scheme.
(15) “residential mortgage backed securities (RMBS)” mean securitisation notes issued by the special purpose entity against underlying exposures that are all secured by residential mortgages;
(16) “re-securitisation exposure” means a securitisation exposure where at least one of the underlying exposures is a securitisation exposure;
(17) “standard assets” for the purpose of these directions shall mean exposures which are not classified as non-performing asset;
(18) “second loss facility” means a second level of financial support providing a second (or subsequent) tier of protection to the securitisation notes issued by the special purpose entity against potential losses not covered by the first loss facility, and is invoked only after the first loss facility has been drawn down and repudiated or exhausted, or the first loss provider is under insolvency or bankruptcy or liquidation;