SEBI's Bold Proposals to Revamp Securitised Debt Market

The Securities and Exchange Board of India (Sebi) proposed amendments to regulations on securitised debt instruments. These include enabling single-asset securitisation by RBI-regulated entities, changes to board compositions, and shifting periodic disclosure responsibilities to servicers. These changes aim to align with RBI regulations and stimulate market growth.

The Securities and Exchange Board of India (Sebi) has tabled significant amendments to regulations concerning securitised debt instruments (SDIs) to foster growth and align with the Reserve Bank of India's (RBI) framework. Central to these proposals is permitting single-asset securitisation transactions by RBI-regulated entities, a move aimed at unlocking market potential currently restricted by existing norms.

In a bid to ensure a seamless operational interface, Sebi has proposed shifting the responsibility for periodic disclosures on the performance of the underlying asset pool from the originator to the servicer. This adjustment is expected to streamline information flow, enhancing transparency for investors while mirroring the operational realities of asset management.

Additionally, the regulator has recommended modifications to the composition of the boards overseeing special-purpose distinct entities, advocating for limited representation for RBI-regulated originators to ensure impartial governance. Public comments on these transformative proposals are open until May 25, marking a pivotal consultation phase for stakeholders.