Sebi Proposes Amendments To Securitised Debt Instrument Rules As Existing Rules Conflict With RBI Directions

The Securities and Exchange Board of India (Sebi) has released a consultation paper proposing changes to its rules for securitised debt instruments (SDIs). The aim is to bring these rules in line with the Reserve Bank of India’s (RBI) 2021 guidelines on securitisation of standard assets.

Sebi has invited public comments on these proposals till May 25, 2026.

The capital market watchdog said the proposed changes aim to reduce differences between its rules and RBI’s framework, improving ease of doing business, and supporting the development of the listed securitisation market.

By aligning its rules with RBI norms, Sebi expects smoother participation from RBI-regulated entities and better overall market efficiency.

Bridging Sebi–RBI Regulatory Gaps

The regulator said the consultation paper aims to seek views on changes “pertaining to the securitisation transactions originated by Regulated Entities of RBI in order to align the same with the revised directions issued by the RBI in September 2021.”

The move follows earlier proposals approved by Sebi’s board in December 2024 and notified in May 2025 to “refresh and restate the regulatory framework governing securitisation.”

However, feedback from market participants later pointed out gaps between Sebi’s rules and RBI’s securitisation norms, especially for RBI-regulated entities. These issues were reviewed by the Corporate Bonds and Securitisation Advisory Committee (CoBoSAC), which then suggested further changes.

Sebi Proposes to Allow Single-Asset Securitisation

One of the key proposals is to allow single-asset securitisation for RBI-regulated entities. At present, Sebi rules say that “no obligor shall have more than twenty five percent in asset pool,” which is meant to reduce concentration risk.

Sebi said this rule “prevents listing of SDIs where the underlying comprises of a single asset, which is otherwise permitted under the RBI’s extant regulatory framework.”

To fix this, Sebi has proposed exempting RBI-regulated entities from this rule. It said the change “would enable single asset securitisation by RBI-regulated entities to be listed.”

Sebi Looks to Make Servicers Accountable

Sebi has also proposed shifting key disclosure responsibilities to the servicer in securitisation deals.

Right now, most disclosure and reporting requirements are handled by the originator. However, Sebi noted that “the servicer is responsible for collection and monitoring of receivables,” and in some cases, the servicer may be a third party.

Based on this, Sebi has proposed that “the periodic disclosure obligations and related certifications may be imposed on the servicer… so as to ensure availability of accurate, timely and comprehensive information to investors.”

Tighter Control on Originator Influence

Sebi has also proposed changes to improve governance in Special Purpose Distinct Entities (SPDEs). At present, trustees linked to the originator or sponsor cannot make up more than half of the board. However, RBI rules place stricter limits on such influence.

Sebi has proposed that for RBI-regulated originators, “the originator should not have more than one representative on the Board of the SPDE who should be without veto power.”

The aim is to ensure that transactions remain at arm’s length and reduce the influence of the originator.

Relaxation in Related-Party Restrictions

In another key proposal, Sebi has suggested easing rules that currently stop securitisation deals between entities in the same group.

Right now, SPDEs are not allowed to acquire receivables from originators within the same group. However, the regulator noted that RBI rules do not have such a strict restriction.

So, Sebi has proposed to exempt RBI-regulated entities and allow such transactions within a regulated setup. This could make some structures eligible for listing that are not allowed at present.

Changes Proposed in Winding-Up Rules

Sebi has also proposed changes to the rules for winding up securitisation transactions. The existing regulations allow Sebi to order “winding up of schemes” of SPDEs, which means selling the assets and repaying investors.

However, the regulator pointed out that RBI’s framework “does not permit the unwinding of securitisation transactions,” as this could mean the originator buys back the assets.

To fix this mismatch, Sebi has proposed that in situations like cancellation of a trustee, it may instead “direct the appointment of a new trustee” instead of winding up the transaction.

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