Lok Sabha Question No. 2778 (UNSTARRED), answered on 2018-12-28
Subject: Relaxing the Securitisation Norms
Ministry: FINANCE
Asked by: RAM CHARITRA

## GOVERNMENT  OF INDIA

## LOK SABHA

## MINISTRY OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

## UNSTARRED QUESTION NO. 2778 TO BE ANSWERED ON THE 28 TH  DECEMBER 2018/ PAUSHA 7,  1940  (SAKA)

## Relaxing the Securitisation Norms

## 2778.  SHRI RAM  CHARITRA  NISHAD:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Reserve  Bank of India has relaxed  the securitisation norms  by  reducing  the minimum holding  period;
- (b) if so, the  details  thereof;
- (c) whether  the move follows  a demand  from the Government  for a special  window  for non-banking financial  companies  to provide  them  liquidity support;  and
- (d) if so, the  details  thereof?

## ANSWER Minister of State in the Ministry  of Finance (SHRI SHIV PRATAP  SHUKLA)

(a) and (b): With  regard to relaxation  of securitisation  norms by Reserve  Bank of India (RBI), RBI has apprised   that   to  encourage   Non-Banking   Financial   Companies   (NBFCs) to  securitise   /assign  their eligible  assets, in respect  of loans  of original  maturity above five years,  RBI has relaxed  till  May  2019 the Minimum  Holding  Period  requirement  for originating  NBFCs  to receipt  of repayment  of six monthly instalments   or  two  quarterly instalments,   subject   to  Minimum   Retention   Requirement   for  such securitisation   /assignment  transactions  being  20% of the book  value  of the loans being  securitised  or 20% of the cash flows  from the assets assigned.

- (c)  and  (d):  With   regard to  special   window   for  NBFCs   to  provide   them   liquidity support,   RBI  has apprised  that  the following  measures  have been taken  to improve  liquidity in the market  and to improve liquidity  of NBFCs:
- (1)  Open  market operations   were   conducted   in  addition   to  regular Liquidity Adjustment   Facility (LAF) auctions  to inject  liquidity in the financial  markets.
- (2) Banks were  permitted  to reckon  Government  securities  held by  them  up to an amount  equal to their  incremental  outstanding  credit  to NBFCs  and Housing  Finance  Companies  (HFCs),  over and above the amount  of credit  to NBFCs  and HFCs  outstanding  on their  books  as on 19.10.2018, as Level  1  High   Quality Liquid   Asset  (HQLA)   under the  Facility   to  Avail   Liquidity for  Liquidity Coverage  Ratio  (FALLCR)  within  the mandatory  Statutory  Liquidity Ratio  (SLR) requirement. This  is in addition  to the existing  FALLCR  of 13 percent  of Net Demand  and Time  Liabilities  (NDTL),  and limited  to 0.5 percent  of the bank's  NDTL.  The above additional  FALLCR  will  be available  up to 31.12.2018.
- (3) The single  borrower  exposure  limit  for NBFCs  that  do not finance  infrastructure stands increased from 10 percent  to 15 percent  of capital  funds, up to  31.12.2018.
- (4)  Banks  were   permitted   on  2.11.2018, to  provide   Partial   Credit   Enhancement   (PCE)  within   the aggregate  PCE exposure  limit  of 20% for bonds of minimum  tenor  of three  years  issued by  NBFCND-SIs registered  with  the RBI and HFCs  registered  with  the National  Housing  Bank, within  one percent   of  capital   funds  and  with   regard to  extant   single/group   borrower   exposure limits   for refinancing  the existing  debt.