RBI Policy
To enable securitisation of stressed assets via mkt-based system
This story was originally published at 11:29 IST on 9 April 2025
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--RBI: Propose to enable securitisation of stressed assets via mkt system
--RBI: Securittsation of stressed assets via market in addition to ARC route
MUMBAI – The Reserve Bank of India has proposed to enable securitisation of stressed assets through a market-based system, Governor Sanjay Malhotra said at the conclusion of the monetary Policy Committee's first bi-monthly meeting for 2025-26 (Apr-Mar). The guidelines for this will be released on Wednesday, Malhotra said.
The new framework, which allows securitisation of such loans through a market-based mechanism, will widen the options for lenders dealing with stressed assets. This will be in addition to the current route through asset reconstruction companies under the SARFAESI Act, 2002. The RBI had floated a discussion paper on this framework in January 2023 to gather feedback on key elements such as capital requirements and minimum risk retention. Based on inputs from stakeholders, the draft framework is now being released for public comments.
Malhotra said the move aims to deepen the market for resolution of stressed assets by improving risk distribution and offering banks and financial institutions an alternative exit route from bad loans. The new mechanism is expected to attract a broader range of investors and provide more flexibility for resolving non-performing assets beyond the asset reconstruction company model. End
Reported by Sachi Pandey
Edited by Avishek Dutta
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