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RBI issues draft guidelines on Securitisation Ordinance

The Reserve Bank of India issued draft guidelines for securitisation and asset reconstruction companies and said its role under the new Act would be to suggest conditions and eligibility criteria with regard to grant of registration certificate to existing as well as new entities for carrying out the business.

The apex bank is empowered to prescribe appropriate prudential norms relating to income recognition, accounting standards, capital adequacy and deployment of funds for such companies, under the Securitisation Ordinance 2002, which has been passed by both houses of Parliament and awaiting presidential assent, it said in a statement in Mumbai on Wednesday.

The RBI said it was empowered to frame guidelines for such companies to take necessary measures for asset reconstruction, including management and resheduling of debt.

The apex bank can also direct either generally or to a particular class of entities or to an entity regarding deployment of funds, acquisition of any type of financial assets, their valuation and aggregate value of financial asset that can be acquired, the statement added.

Based on the recommendations of a RBI constituted groups for the working of securitisation/reconstruction of companies, the apex bank has invited comments from banks, FIs and the general public on the securitisation/reconstruction companies and prudential norms 2002.

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