Sebi Proposes Overhaul in Securitization Regulations

The Securities and Exchange Board of India (Sebi) has put forth proposals to revise regulations for securitized debt instruments, suggesting a minimum investment of Rs 1 crore, limits on private investors, and mandatory demat form for issuance. Public input is welcome until November 16.

The Securities and Exchange Board of India (Sebi) has proposed new regulations aimed at overhauling the securitization market. Key aspects include setting a minimum investment threshold of Rs 1 crore for RBI-regulated and unregulated securitization entities.

The proposed changes also limit private placements of securitized debt instruments (SDIs) to a maximum of 200 investors. Should this limit be surpassed, the securities must be issued as a public offering. Additionally, public offerings are to remain open for a set period of three to ten days, with advertising requirements aligning with existing Sebi standards for non-convertible securities.

Significant updates include the mandate that all SDIs be issued and transferred in demat format. Sebi has called for public feedback on these proposals by November 16. These recommendations reflect an effort to modernize the 2008 regulatory framework with updates in line with the RBI’s 2021 guidance for securitizing standard assets.

(With inputs from agencies.)