Categories: Banking

RBI fixes minimum ticket size to issue securitisation notes

The Reserve Bank of India has issued guidelines regarding the Securitisation of Standard Assets. As per the guidelines, the minimum ticket size for the issuance of securitization notes will be Rs. 1 crore. 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. It means securities issued by the special purpose entity as a part of a securitization.

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About Minimum Retention Requirement (MRR)

  • For underlying loans with an original maturity of 24 months or less, the MRR shall be 5% of the book value of the loans being securitised.
  • For underlying loans with an original maturity of more than 24 months as well as loans with bullet repayments, the MRR shall be 10% of the book value of the loans being securitised.
  • In the case of residential mortgage-backed securities, the MRR for the originator shall be 5% of the book value of the loans being securitised, irrespective of the original maturity.

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Sumit Arora

As a team lead and current affairs writer at Adda247, I am responsible for researching and producing engaging, informative content designed to assist candidates in preparing for national and state-level competitive government exams. I specialize in crafting insightful articles that keep aspirants updated on the latest trends and developments in current affairs. With a strong emphasis on educational excellence, my goal is to equip readers with the knowledge and confidence needed to excel in their exams. Through well-researched and thoughtfully written content, I strive to guide and support candidates on their journey to success.

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