Financial Regulatory Forum

India central bank increases securitisation disclosure requirements

MUMBAI, Feb 8 (Reuters) – The Indian central bank on Monday increased disclosure requirements for banks who sell securitised assets, to increase transparency for investors under the enhanced Basel II framework.

The Reserve Bank of India said banks needed to clearly state what role they had played in the securitisation of an asset, including whether they were an originator, investor, provider of credit enhancement or liquidity provider while securitising assets.

Following is the link to the notification:

“In light of the wide range of risks arising from securitisation activities, which can be compounded by rapid innovation in securitisation techniques and instruments, minimum capital requirements calculated under Pillar 1 are often insufficient,” RBI said.

The risks which needed to be addressed under securitisation include credit, market, liquidity, reputational risks, potential delinquencies and losses on underlying securitised exposures, exposures from credit lines, the central bank said.

Banks should state policies for recognising liabilities on their balance sheets for arrangements that could require them to provide financial support for securitised assets.

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