RBI Proposes Demat-Only Framework For Securitisation Notes To Boost Market Transparency

New Delhi, Jul 29 (KNN) The Reserve Bank of India (RBI) has proposed that all securitisation notes be issued, held and transferred only in dematerialised (demat) form, as part of draft amendments aimed at improving efficiency, liquidity and transparency in the securitisation market.

The central bank released separate draft amendment directions for commercial banks, small finance banks, non-banking financial companies (NBFCs) and All India Financial Institutions (AIFIs), and has invited public comments until August 27, 2026. 

The proposed rules are scheduled to come into effect from October 1, 2026.

Key Proposals

Under the draft norms, securitisation notes—financial instruments created by pooling loans such as housing or vehicle loans—will be mandatorily issued and traded in demat form.

The RBI has also proposed that the minimum investment size, or ‘ticket size’, of Rs 1 crore be maintained not only at issuance but also in all subsequent transfers. 

Agreements between the originating lender and the special purpose entity (SPE) issuing these notes must include provisions to ensure continued compliance with this requirement.

Alignment with SEBI Regulations

In another move, the RBI has proposed aligning its framework with norms set by the Securities and Exchange Board of India. An offer of securitisation notes will be treated as a public issue if it is made to the number of investors specified under SEBI’s regulations governing securitised debt instruments.

Objective and Scope

The amendments are intended to standardise practices across regulated entities and improve transparency in issuance and secondary market transactions. 

By mandating dematerialisation and maintaining a high minimum investment threshold, the RBI aims to streamline operations while ensuring that participation remains largely institutional.

The proposed changes will apply uniformly across banks, NBFCs, small finance banks and AIFIs once finalised.

(KNN Bureau)