SEBI Rolls Out Draft Guidelines to Boost Transparency in Securitisation Market
By Ankur Chandra | Published at: Jun 17, 2025 11:08 AM IST
Mumbai, June 17, 2025: The Securities and Exchange Board of India (SEBI) has issued a draft circular that introduces a framework for periodic disclosures by trustees of Special Purpose Distinct Entities (SPDEs) involved in issuing Securitised Debt Instruments (SDIs). The proposed framework is intended to increase transparency, enhance investor protection, and align regulatory practices with the Reserve Bank of India’s securitisation guidelines.
Purpose of the Draft Circular
SEBI has opened the floor to public opinion through a consultation paper, suggesting a detailed framework that mandates half-yearly disclosures by trustees managing securitised asset pools. These disclosures will be required within 21 days following the end of each half-year period March and September. The proposal applies to SDIs backed by both loan-related exposures and other asset categories. The consultation period will remain active until July 7, 2025.
Proposed Disclosure Structure
As per the draft circular, issued under Regulation 11B of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, trustees must report the following details to SEBI and relevant stock exchanges:
For Loan-Related Exposures / Listed Debt Securities / Credit Facilities
| Disclosure Category | Parameters |
|---|---|
| Maturity Profile | Weighted average maturity, asset maturity distribution |
| Minimum Retention Requirement (MRR) | Type and extent of retained exposures |
| Credit Quality | Delinquencies, security coverage, LTV, DTI, ratings |
| Historical Performance | Default, recovery, and prepayment rates |
| Amendments | Changes to documentation or payment terms |
| Pool Characteristics | Industry and geography-wise asset distribution |
| Other Information | Material events, obligor risks, servicing issues |
For Other Exposures (e.g. trade receivables)
| Disclosure Category | Parameters |
|---|---|
| Collection Performance | Deviations from projected cashflows |
| Default Events | Obligor-level impact and prepayment behavior |
| Recovery Efforts | Action taken and outcomes post-default |
| Credit Support Usage | Credit enhancement and liquidity facility usage |
| Amendments | Changes post-securitisation |
| Risk Factors | Material issues impacting originator or servicer performance |
Methodology and Metrics Guidance
The draft includes Annexure III, outlining sample calculation methods for essential indicators such as:
- Weighted Average Maturity: Based on projected asset cash flows
- Weighted Average Pool Rating: Collated from internal or external ratings
- Average Default Rate: Based on a rolling 12-month average e.g., 3.46% from July 2024 to June 2025
Legal Framework and Regulatory Authority
The proposed circular is backed by Section 11(1) of the SEBI Act, 1992, and Regulations 11B and 48 of the SDI Regulations. This legal base empowers SEBI to introduce new disclosure requirements that uphold market fairness and protect investor interests in the securitisation space.
Feedback Submission Mechanism
SEBI has provided a structured online form through its official website for stakeholders to share feedback. Respondents are asked to review the consultation paper and rate their level of agreement with each of the proposed clauses. SEBI has issued detailed instructions to guide users through the submission process.
India’s Securitisation Regulatory Landscape
Securitisation in India is jointly overseen by SEBI and the Reserve Bank of India. While SEBI handles the listing, issuance, and trading of SDIs, the RBI supervises the origination side under its Securitisation of Standard Assets Directions (2021) and the SARFAESI Act (2002) for stressed assets. The new draft circular intends to create better alignment between SEBI’s SDI framework and the RBI’s guidelines.
What Comes Next
SEBI has urged market stakeholders including trustees, investors, credit rating agencies, and financial institutions to submit their responses by July 7, 2025. These insights will be used to finalise the disclosure regulations and build a more transparent and investor-friendly securitisation market in India.
REF: https://www.sebi.gov.in/reports-and-statistics/reports/jun-2025/consultation-paper-on-draft-circular-mandating-periodic-disclosure-requirements-for-securitised-debt-instruments-sdis-_94612.html
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