RBI proposes mandatory demat form for securitisation notes, keeps Rs 1 crore minimum investment size

In separate draft amendment directions issued for commercial banks, small finance banks, non-banking financial companies (NBFCs) and All India Financial Institutions (AIFIs), the RBI said the changes are intended to "improve efficiency, liquidity and transparency in issuance and subsequent transfer of Securitisation Notes (SNs)."

Under the proposed changes, "the issuance, holding and subsequent transfer of securitisation notes under these Directions shall only be in a dematerialised form." The RBI has also proposed that the minimum investment size remain at Rs 1 crore not only when these securities are first issued but also in every subsequent transfer.

Securitisation notes are securities created by pooling together loans such as home, vehicle or other retail loans and selling them to investors. This allows banks and NBFCs to raise fresh funds, which can then be used to extend more loans.

The draft amendments also require agreements between the lender and the special purpose entity (SPE) issuing these securities to include a clause ensuring continued compliance with the Rs 1 crore minimum investment requirement. The RBI clarified that the "ticket size" refers to the investment made by a single investor.

In another change, the RBI has proposed to align its rules with the Securities and Exchange Board of India (SEBI) regulations governing securitised debt instruments. It said an offer of securitisation notes would be treated as a public issue if it is made to the number of persons specified under SEBI's Issue and Listing of Securitised Debt Instruments and Security Receipts Regulations, 2008, as amended from time to time.

The proposed amendments are scheduled to come into effect from October 1, 2026, after the consultation process. The RBI has invited comments from stakeholders on the draft directions until August 27, 2026. (ANI)