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RBI Draft Framework for Securitising Stressed Assets

10 April 20251 min read
BANKING & FINANCERBI DraftFramework forSecuritisingStressed Assets10 April 2025safalsetu.com

Why in the news

RBI drafted a market-driven securitisation framework so banks can offload stressed loans and ease NPA pressure.

Key facts

  • Works alongside the ARC route of the SARFAESI Act, 2002.
  • Loans bundled as tradable securities and sold for cash to a Special Purpose Entity (SPE).
  • SPE-appointed Resolution Manager handles the pool.
  • Draft covers valuation, investor capital and disclosures.

Not eligible

  • Re-securitised and synthetic exposures; farm credit; education loans; frauds; wilful defaults.

Significance

  • Wider investor base, risk spread and a new exit for lenders.

Test yourself

1. RBI's proposed market-based securitisation of stressed assets would work alongside ARCs governed by which Act?

It operates alongside the ARC mechanism under SARFAESI Act, 2002.

2. Under RBI's draft framework, who manages the securitised pool of stressed assets?

A Resolution Manager is appointed by the Special Purpose Entity.

3. Which asset class is NOT eligible for securitisation under RBI's draft stressed-asset framework?

Farm credit, education loans, frauds and wilful defaults are excluded.

This topic is part of Daily Current Affairs 10 April 2025 (24 topics).

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