RBI to enable securitisation of stressed assets through a market-based mechanism

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RBI to enable securitisation of stressed assets through a market-based mechanism

AIMPWA

April 9, 2025

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RBI Governor Sanjay Malhotra
| Photo Credit:
HEMANSHI KAMANI

The RBI intends to enable securitisation of stressed assets through a market-based mechanism, in addition to the existing ARC (asset reconstruction company) route under the SARFAESI Act, 2002.

In this regard, the central bank will issue a draft framework for securitisation of stressed assets for public comments. This will factor in the suggestions received from the stakeholders on the discussion paper in this regard.

Governor Sanjay Malhotra noted that a prudentially structured securitisation transaction can be an enabler for resolution of stressed assets as it is expected to improve risk distribution and provide an exit route from such exposures for lenders.

RBI had released a discussion paper on Securitisation of Stressed Assets Framework in January 2023, to seek comments from market participants on various aspects of the framework. After factoring in the suggestions received from the stakeholders on the discussion paper, the draft framework for securitisation of stressed assets is being issued for public comments.

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