Stressed assets discussion

Stressed assets discussion

The RBI is seeking public comment on a discussion paper on the Securitisation of Stressed Asset Framework (SSAF). The securitisation of non-performing assets (NPAs) has features that distinguish them from the securitisation of standard assets. The paper delineates broad features of a proposed framework.

The paper notes that securitisation involves pooling loans and selling them to a special purpose entity (SPE), which then issues securities backed by the loan pool. However, there is no corresponding mechanism for securitisation of NPAs through the SPE route. The paper seeks to explore whether the SSAF should be limited only to NPAs or include standard assets up to a certain threshold. There is discussion about types of assets that might be eligible, like term loans, big ticket loans, small ticket loans commercial/residential mortgages and loans to MSMEs.

The paper follows RBI’s 30 September 2022 statement on Developmental and Regulatory Policies, which announced an intention to create a framework in addition to the asset reconstruction company route.