RBI master-direction RBI/DOR/2025-26/353 · 28 Nov 2025
Official title
Reserve Bank of India (Non-Banking Financial Companies – Securitisation Transactions) Directions, 2025 (Updated as on July 01, 2026)
Summary
Check the official recordThe Reserve Bank of India establishes a regulatory framework for securitisation transactions by Non-Banking Financial Companies (NBFCs). These directions define eligible assets, minimum retention requirements (MRR), and origination standards to ensure risk alignment. NBFCs must maintain a minimum retention of 5 to 10 percent of the book value of securitised loans. The framework prohibits synthetic securitisations and re-securitisations. It mandates specific conditions for special purpose entities (SPEs) to ensure bankruptcy remoteness and arm's length operations. Originators must submit transaction details to the Reserve Bank quarterly. The directions also outline criteria for Simple, Transparent, and Comparable (STC) securitisations and set requirements for credit enhancement, liquidity facilities, and investor due diligence. These rules apply to specified NBFC categories, excluding entities like P2P lenders and Type I NBFCs.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DOR/2025-26/353
DOR.STR.REC.272/21.04.177/2025-26
November 28, 2025
Previous Versions
Reserve Bank of India (Non-Banking Financial Companies – Securitisation Transactions) Directions, 2025 (Updated as on July 01, 2026)
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 by Sections 45JA, 45K, 45L, 45M and 45MA of the Reserve Bank of India Act, 1934 (Act 2 of 1934), Sections 30A, 32 and 33 of the National Housing Bank Act, 1987, Sections 3, 31A and 6 of the Factoring Regulation Act, 2011 (Act 12 of 2012), the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies - 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.
(i) NBFC-D registered with the RBI under the provisions of the RBI Act, 1934;
(ii) NBFC-ICC registered with the RBI under the provisions of the RBI Act, 1934;
(iii) NBFC-Factor registered with the RBI under the provisions of the Factoring Regulation Act, 2011;
(iv) NBFC-MFI registered with the RBI under the provisions of the RBI Act, 1934;
(v) NBFC-IFC registered with the RBI under the provisions of the RBI Act, 1934;
(vi) IDF-NBFC registered with the RBI under the provisions of the RBI Act, 1934;
(vii) HFC registered with the RBI under the provisions of the NHB Act, 1987;
These Directions are not applicable for the following:
(i) MGC registered with RBI under the scheme of Registration of Mortgage Guarantee Companies
(ii) NBFC-P2P registered with the RBI under the provisions of the RBI Act, 1934;
(iii) NBFC-AA registered with the RBI under the provisions of the RBI Act, 1934;
(iv) CIC registered with the RBI under the provisions of the RBI Act, 1934;
(v) SPD registered with the RBI as NBFCs under the provisions of the RBI Act, 1934;
(vi) NOFHC registered with the RBI as NBFC under the provisions of the RBI Act, 1934;
(vii) 1[NBFC holding Certificate of Registration as ‘Type I NBFC’];
(viii) ‘NBFCs in Base layer having customer interface but not availing public funds’.
Note:
The applicability under these Directions is in line with the regulatory structure for NBFCs as set out in Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.
(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 write downs/specific provisions the NBFC 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 NBFC 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.
