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The Reserve Bank of India has today announced changes in the guidelines issued to securitisation companies and reconstruction companies. The guidelines were originally issued on April 23, 2003 and September 20, 2006. The changes have been announced to facilitate such companies in complying with the guidelines. According to the changed guidelines :
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Securitisation companies (SCs)/reconstruction companies (RCs) can acquire the assets either in their own books or directly in the books of the trusts set up by them.
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The period for realisation of assets acquired by SC/RCs can be extended from five years to eight years by their Board of Directors, subject to conditions.
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Additional avenues for deployment of surplus funds with National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) are provided to securitisation companies and reconstruction companies. An upper limit of 10 per cent of the owned funds has been stipulated for the investment of SC/RCs in land and buildings for their own use.
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Any asset/security receipts which remain unresolved/not redeemed as at the end of five years or eight years would now be treated as loss asset.
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With a view to bringing transparency and market discipline in the functioning of SC/RCs, additional disclosures related to assets realised during the year, value of financial assets unresolved as at the end of the year, value of security receipts pending for redemption, etc., have been prescribed.
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It is now mandatory for SC/RCs to invest in and continue to hold a minimum five per cent stake of the outstanding amount of the security receipts issued by them under each scheme and each class till the redemption of all the security receipts issued under a particular scheme.
Two circular containing these modifications have been placed on the Reserve Bank of India’s website (www.rbi.org.in (www.rbi.org.in) ).
Alpana Killawala
Chief General Manager
Press Release : 2009-2010/1429
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