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Gold, personal loan PTCs affected, direct assignments not expected to be impacted

The Reserve Bank of India (RBI) amended its Master Directions on Securitisation of Standard Assets on December 5, Monday, barring securitisation of loans with residual maturity of less than 365 days — other than for trade receivables.

This would limit the issuance of pass-through certificates (PTCs) backed by shorter tenure loans originated by non-banking finance companies (NBFCs).

Separately, the minimum holding period (MHP) for mortgages has now been linked to the date of full disbursement, or registration of security interest (with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India), whichever is later. This clears the fog around equitable mortgages.

Says Krishnan Sitaraman, Senior Director and Deputy Chief Rating Officer, CRISIL Ratings Ltd, “Gold loans and some unsecured personal loans offered by NBFCs have original tenures ranging from a few months to two years. The shorter tenures, combined with the MHP of three months, and seasoning filters applied by investors could lead to many of these loans coming up short on the minimum 365 days’ residual maturity norm. However, PTCs backed by these asset classes currently account for less than 5% of the securitisation market. The impact on other asset classes such as vehicle finance, SME loans and mortgages is expected to be limited considering their original loan tenures of three or more years.”