The Reserve Bank of Indias (RBI) plans to amend its
securitisation transaction guidelines have been criticised by
the domestic banking sector as potentially harmful to the
market. But lawyers argue that can only be a good
draft amendments to its securitisation transactions rules
on September 27, following submission of feedback from banks
and other market participants on the original draft guidelines
released in April 2010.
The move aims to develop a healthy securitisation market in
India by preventing issuers looking for short-term profit, from
originating securitised loans and selling them off immediately
to other institutions without proper due diligence on the risk
of underlying debts.
Key changes include the stipulation that the minimum holding
period (MHP) for loans with monthly payments and an original
maturity of up to two...