RBI Plans Mandatory Demat for Securitisation Notes

The Reserve Bank of India (RBI) has released draft amendments proposing that all securitisation notes (SNs) be issued, held, and transferred exclusively in dematerialised (demat) form. The proposed regulatory changes are intended to strengthen operational efficiency, improve market liquidity, and enhance transparency in the securitisation framework.

The draft directions apply to commercial banks, small finance banks (SFBs), non-banking financial companies (NBFCs), and All India Financial Institutions (AIFIs). According to the proposal, securitisation notes will no longer be permitted in physical form once the revised framework becomes effective.

The RBI has also proposed to continue the minimum investment requirement of ₹1 crore for securitisation notes. This threshold would apply not only at the time of initial issuance but also to every subsequent transfer, ensuring that each individual investor maintains the prescribed minimum investment amount.

To support compliance, agreements executed between the originating lender and the Special Purpose Entity (SPE) responsible for issuing securitisation notes must include provisions requiring adherence to the prescribed minimum investment size. The RBI has clarified that the investment threshold applies on a per-investor basis.

In addition, the central bank has proposed aligning its securitisation framework with the Securities and Exchange Board of India (SEBI) regulations governing securitised debt instruments. Under the proposed amendments, an offer of securitisation notes will be classified as a public issue if it is made to the number of investors specified under SEBI's Issue and Listing of Securitised Debt Instruments and Security Receipts Regulations, 2008, as amended from time to time.

The proposed amendments are scheduled to become effective October 1, 2026, subject to completion of the consultation process. The RBI has invited comments and feedback from stakeholders on the draft directions until August 27, 2026.

CA Sansaar