RBI tightens norms for securitisation of loans by NBFCs

The revised RBI guidelines also stipulate that NBFC cannot sell or securitize a loan unless three monthly instalments have been paid by the borrower

Mumbai: The Reserve Bank of India (RBI) has tightened the non-banking finance company (NBFC) securitisation norms by stipulating that an NBFC will have to retain at least 5% of the loan being sold to another entity, reports PTI.


The revised guidelines, issued by the RBI also stipulate that NBFC cannot sell or securitize a loan unless three monthly instalments have been paid by the borrower.


These stipulations, the central bank said are aimed at checking "unhealthy practices" and distributing risk to a wide spectrum of investors.


Giving details of the guidelines, the RBI said a loan up to two years can be securitised only after payment of three monthly instalments by the borrower. The limit for loans between two and five years is six monthly instalments and above five years, 12 monthly instalments.


With regard to minimum retention requirement (MRR) for securitisation, the guidelines said the NBFCs selling loans will have to retain 5% of the amount if the loan is for less than two year period and 10% if it is of over two years.


The originating NBFCs, it said should disclose to investors the weighted average holding period of the assets securitised and the level of their MRR in the securitisation.


They should also ensure that prospective investors have readily available access to all materially relevant data on the credit quality and performance of the individual underlying exposures, cash flows and collateral supporting a securitisation exposure, RBI said.


As per the guidelines, NBFCs should formulate policies regarding the process of due diligence to be exercised by their own officers to satisfy about the Know Your Customer requirements and credit quality of the underlying assets.


RBI also said that NBFCs will not be permitted to carry out re-securitisation of assets and synthetic securitisation, which refers to bundling of assets with different risk profile.


These guidelines have to implemented by NBFCs in two phases by October end.


Earlier, the RBI had issued similar guidelines with regards to securitisation of loans by banks.


FIS to deploy, manage 5,500 ATMs of PSU banks

Under the multi-year agreement, FIS will provide end-to -end outsourcing services including supply, setup and ongoing ATM operation for over 5,500 ATMs of PSU banks across India

New Delhi: Banking and payments technology provider FIS announced deploying and managing over 5,500 ATMs as part of a pan-India ATM rollout to be undertaken by a consortium of state-owned (PSU) banks over the next two years, reports PTI.


Under the multi-year agreement, FIS will provide end-to -end outsourcing services including supply, setup and ongoing ATM operation, the Jacksonville (Florida)-based company said in a statement.


"Currently driving more than 3,500 ATMs across India and operating two of India's four interbank ATM switching networks, the new deployment will significantly expand FIS' business in the country, which is a key market in FIS' international growth strategy," it added.


Mark Davey, Executive Vice President of FIS International Solutions Group said that through this initiative, the company will more than double the number of ATMs it supports in India.


Finance Minister P Chidambaram last week said that public sector banks have been asked to double the number of their ATMs, currently number around 63,000, in the next two years.


The banks have also been asked to upgrade the ATMs to accept deposits as well.


Do we need a rocket to Mars or a serious race for more Olympic medals?

India can obtain whatever information it needs about Mars from the US, on a gratis basis. But we need to make serious efforts to better our record in sports, from having won six medals in the recently concluded London Olympics

India has ambitious plans afoot to launch a rocket in the next few years to probe into Mars at a cost of a couple of billion dollars to find for ourselves what is happening out there. In other words, we are trying to reinvent the wheel, when on a government-to-government basis, by a co-operative arrangement with NASA (National Aeronautics and Space Administration), we could obtain most of the information, probably on a gratis basis. What a pity.


In the meantime, we are still celebrating with the victorious team members who have returned from the London Olympics with six medals having made some progress in new fields of sports, having found a place at the bottom of the table in hockey—which we reigned supreme for decades.


In a study published in the Business Line, the author of the report, Satyanarayan Iyer, has detailed how the very idea of hosting the Olympics inspired the indigenous population to greater heights and brought home more medals as a result. And he is right, as the actual statistical data shows.


Australia improved from 27 medals in 1972 to 41 medals in Atlanta in 1996; moved up further to 58 in Sydney (2000), declined to 50 in Athens (2004), but got none at all in Beijing or in London.


Greece, on the other hand got eight in Atlanta, 13 in Sydney, 16 in Athens and came down to four in Beijing, with no success in London. China, the giant had none in Atlanta, smashed its way to 58 in Sydney, moved to 63 in Athens and reached a century of medals in Beijing but lost a few to reach only 87 in London.


UK had no luck in Atlanta and Sydney, secured 30 in Athens, moved to 47 in Beijing and did well to get 65 in London. Brazil picked up 15 medals in Beijing and 17 in London. It appears, for whatever reasons, UK is predicted to get less number of medals in Rio while Brazil may get a little more.


The author feels that India must attempt to get the right to stage the Olympics in 2020 so as to encourage the Indian spirits to rise high and win more medals than what was secured in London. Not a bad idea, but how do we go about it?


First things first.  India’s loss in hockey is unbearable. And the strides made in boxing, wrestling and shooting are encouraging. But, looking at the Olympics as a whole, we need to look at the issue in a realistic way.


Since we have a great number of facilities available in the Capital, and certain additions may be required to bring it Olympic standards, for the sake of convenience, we may treat this city as the venue for the Olympics as a suitable location, as a start. We should then move on to make a formal request to International Olympic Committee for considering India as a potential candidate to host the 2020 Olympics. Meantime, we must come up with a seven-year plan to achieve, what we hope to do in the 8th year—the year of Indian Olympics.


Form an organizing committee of expert professionals in the field of sports to decide the areas of Indian participation whole heartedly. As a start, we already have some experience in wrestling, boxing, archery, shooting; we have some talent in track events and javelin/discuss; some other areas may attract or discover new talents in the country. Hockey is our lost pride, we must aim to get back at all costs.


Next step is to ensure we establish a University of Sports with a four-year curriculum where the selected talents will be given admission. These boys and girls will have to be housed in the campus where they will undergo rigorous training and study. By the fourth year, they will not only graduate in sports but will also have an educational degree at the same time. We must realize that all the sportspersons will peak out by 30-35 years of age, at best, after which they need to ‘earn’ a livelihood, have their own family and, of course, take care of their parents, who, after all, sent them to the University of Sports in the first place!


Each state of the Indian Union will establish a campus for this University of Sports; the admission to the university will depend upon the norms laid down and results obtained in state annual sports championships; year after year. The best of the talents found in the annual sports meet would then be given selective training and the very best in each category will have even more rigorous training in India or abroad, so that they are exposed to further severe competition in national and international meets.


To meet such an enormous expense, Indian business houses and corporate bodies may generously donate funds which will have tax benefits in line with what the ministry of finance may advice. Also, individuals and corporate bodies may be allowed to ‘sponsor’ candidates of their choice so that their expenses can be met, and, eventually, such companies employ the candidates once their ‘peak’ performance period is over.


Will these moves get us a lot of medals? Not necessarily and one cannot be sure; but, for one thing, it will create sports awareness; keep our children from getting into indiscipline; away from tobacco, drugs and booze and other related vices and give them the opportunity to walk tall as Indians and to perform successfully internationally in the field of sports.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at



anantha ramdas

5 years ago

dear mr pratap:

there is nothing that an Indian cannot do, once he/she makes up his/her mind!

if you look back, you will find that you are probably doing much better than what your parents were doing; they were doing better than what their parents did; and likewise, you are striving hard and encouraging your own children to do better than you what you have achieved. Of course, genes do matter, and we Indians have a long unbroken tradition of culture, civilzation and valor.

Sir, don't underestimate your latent genes. Just nudge and wake them up and you will be surprised with the miracle result!

good luck and god bless

vijai pratap

5 years ago


We Indians need more than that.
Sportsmanship, instinct to play to win.
Its not in our genes,sir.

We are listening!

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