Regulation 30B - Minimum retention requirement - Securities And Exchange Board Of India (Issue And Listing Of Securitised Debt Instruments And Security Receipts) Regulations, 2008

1 [Minimum retention requirement 30B (1) The special purpose distinct entity shall ensure that the originator shall ensure compliance with the provisions of this regulation. (2) The originator shall retain a minimum of ten per cent. of the book value of the debt or receivable being securitised: Provided that in cases where the scheduled maturity of any of the cash flows in the transaction is within twenty four months, the originator shall retain a minimum of five per cent. of the book value of the asset being securitised. (3) In the case of residential mortgage backed securities, the originator shall retain a minimum of five per cent. of the book value of the loans being securitised, irrespective of the original maturity. (4) The originator shall retain the book value referred in sub-regulation (3) in the following manner: (a) In case where only upto five per cent. of the book value of loans is being securitised: i. First loss facility, if available; ii. If first loss facility is not available, or where retention of the entire first loss facility amounts to less than five per cent., balance through retention of equity tranche; iii. Where retention of the entire first loss facility, if available, and equity tranche amounts to less than five per cent, balance pari passu in remaining tranches sold to investors. (b) In case where more than five per cent of the book value of loans is being securitised: First loss facility, or equity tranche or any other tranche sold to investors, in any combination thereof. Explanation: (1) It is clarified that first loss facility for this purpose shall not include overcollateralization available, if any. (2) Investment in the Interest Only Strip representing the Excess Interest Spread or Future Margin Income, whether or not subordinated, will not be counted towards the requirement of this regulation. (5) The following conditions shall be complied with while ensuring compliance with this regulation: (a) The originator shall not reduce the percentage of the risk specified to be retained either through hedging of credit risk or selling or encumbering the retained interest. (b) The originator shall retain and maintain the minimum risk itself and shall not pass on the same to any of its group entities. (c) The form of minimum risk specified to be retained shall not be changed during the life of securitisation. (d) The minimum risk retained as a percentage of unamortised principal should be maintained on an ongoing basis except for reduction of retained exposure due to repayment or through the absorption of losses. ] *************** NOTES:- 1 . Inserted vide F. No. SEBI/LAD-NRO/GN/2025/247 dated 05-05-2025