Securitised Debt Instruments

In November, 2024, the Securities and Exchange Board of India (SEBI) has introduced new guidelines for securitised debt instruments (SDIs), aiming to strengthen investor protection and streamline the securitisation framework.

SEBI has proposed a minimum investment threshold of Rs 1 crore for participants investing in securitised products, targeting primarily institutional investors and high-net-worth individuals to ensure informed participation.
The proposal limits the number of investors in privately placed SDIs to 200, enforcing reclassification to a public offer if this number is exceeded, to maintain regulatory compliance for broader offerings.
Public offerings of SDIs will be mandated to remain open for a minimum of three and a maximum of ten days, with advertising aligned with SEBI's rules for non-convertible securities to ensure transparency.
SEBI requires that all securitised debt instruments be issued in dematerialised form, a shift aimed at enhancing market transparency, reducing fraud risk, and improving settlement efficiency through electronic transactions.
Originators of securitised assets must retain a minimum risk exposure of 10% for pools with over 24-month maturities, and 5% for those with shorter terms, aligning their interests with investors to ensure asset performance.