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RBI fixes minimum ticket size to issue securitization notes
- The Reserve Bank of India (RBI), on Friday, said the minimum ticket size for issuance of securitization notes will be ₹1 crore even as it recommended listing of these notes.
Securitization involves transactions where credit risk in assets are redistributed by repackaging them into tradeable securities with different risk profiles, which may give investors of various classes access to exposures which they otherwise might be unable to access directly.
- This is aimed at preventing investors being subjected to unexpected repayment profiles during the life of a securitization; listing of securitization notes, especially in respect of certain product class, such as Residential Mortgage Backed Securities, and/ or generally above a certain threshold is recommended, though not mandatory
In any case, any offer of securitization notes to fifty or more persons in an issuance would be required to be listed in terms of Securities and Exchange Board of India (Issue and Listing of Securitized Debt Instruments and Security Receipts) Regulations, 2008.
RBI issues new rules for securitisation of standard assets, loan transfers
Reserve Bank of India (RBI) has issued separate master directions on transfer of loan exposures and securitization of standard assets. These master directions came after considering public comments on draft rules issued on June 8, 2020.
Applicability: This master direction will apply to all scheduled commercial banks, excluding regional rural banks, all-India term financial institutions, small finance banks, and NBFCs.
Minimum Retention Requirement (MRR)
- In the Master Direction Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021, RBI specified the Minimum Retention Requirement (MRR) for different asset classes.
- For underlying loans with original maturity of 24 months or less, the MRR will be 5 per cent of the book value of the loans being securitised
- For those with original maturity of more than 24 months as well as loans with bullet repayments, the MRR shall be 10 per cent of the book value of the loans being securitised.
- In the case of residential mortgage-backed securities, the MRR for the originator shall be 5 per cent of the book value of the loans being securitized, irrespective of the original maturity.
Transfer of Loans
- Lenders resort to loan transfers for various reasons, ranging from liquidity management, rebalancing their exposures or strategic sales
- The master direction has also prescribed a minimum holding period for different categories of loans after which they shall become eligible for transfer.
- MHP is 3 months in case of loans with tenor of up to 2 years and 6 months in case of loans with tenor of more than 2 years.
- The master direction directs that “a loan transfer should result in immediate separation of the transferor from the risks and rewards associated with loans to the extent that the economic interest has been transferred".
- 'Transferor' means the entity which transfers the economic interest in a loan exposure, while 'transferee' refers to the entity to which the economic interest in a loan exposure is transferred.
Ways And Means Advances Limit For For Second Half Of FY22 Fixed At Rs 50000 Crore
- The Reserve Bank Of India (RBI) stated that it has been decided, in consultation with the Government of India, that the limit for Ways and Means Advances (WMA) for the second half of the financial year 2021-22 (October 2021 to March 2022) be fixed at Rs 50000 crore.
- The Reserve Bank may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit
RBI removes Indian Overseas Bank from Prompt Corrective Action framework
- Reserve Bank of India on Wednesday announced removal of Prompt Corrective Action (PCA) restrictions on Indian Overseas Bank (IOB). This decision gives the bank more freedom for lending, especially to corporations and grow the network, subject to presribed norms.
- In 2021, RBI has also removed PCA restrictions on IDBI Bank and UCO Bank.
- Indian Overseas Bank Headquarters: Chennai;
- Indian Overseas Bank CEO: Partha Pratim Sengupta;
NABARD approves credit plan for rearing Himalayan yaks
- The National Bank for Agriculture and Rural Development (NABARD) has approved a credit plan for the high-altitude animal often referred to as “mountain cattle”.
- The scheme was developed by the National Research Centre on Yak (NRCY) at Dirang in Arunachal Pradesh's West Kameng distric
- The NRCY comes under the Indian Council of Agricultural Research.
- Yak is one of the most prized animals of the Himalayan region due to its multifarious roles in strengthening nutritional security through milk and meat, providing shelter and clothing through its fibres.
Centre to borrow ₹5.03 lakh crore in second half of FY22
- The Central government will borrow around ₹5.03 lakh crore from the market for the second half of the financial year ending March 2022 (FY22).
- The government, in consultation with the Reserve Bank of India (RBI), has finalised its borrowing programme for the H2 (October 2021 to March 2022) of FY22.
- According to the budget for 2021-22, the government's gross borrowing was estimated at Rs 12.05 lakh crore.
- The government said, out of the budgeted borrowing figure of ₹7.24 lakh crore in the first half (H1), around ₹7.02 lakh crore was completed
- The Budget has pegged fiscal deficit at 6.8 per cent for the next fiscal, down from 9.5 per cent of the GDP in the current financial year.
ICICI Bank Offers OD Facility to Sellers Registered on Amazon India
- ICICI Bank on Monday announced that it has partnered with Amazon India to offer overdraft (OD) facility upto ₹25 lakh to individual sellers and small businesses registered on the e-commerce company’s online marketplace.
- Even customers of other banks can avail the OD facility from ICICI Bank, if they are registered as sellers with amazon.in.
IndusInd Bank, Vistara launch co-branded credit card
- Private lender IndusInd Bank on Monday said it has partnered full-service airline Vistara to launch a co-branded credit card.
- Called Club Vistara IndusInd Bank Explorer credit card, it aims to fulfil the requirements of customers who prefer being on the go
- Tata SIA Airlines Limited, operating as Vistara, is an Indian full-service airline, based in Gurgaon.
- The carrier, a joint venture between Tata Sons and Singapore Airlines in 51:49 ratio, commenced operations on 9 January 2015
Federal Bank partners with NPCI to launch Federal Bank RuPay Signet Contactless credit card with lowest APR
- Federal Bank on Monday said it has partnered with National Payments Council of India (NPCI) to launch a contactless credit card.
- The bank, in its statement, claimed that the card has the lowest Annual Percentage Rate (APR) in the industry starting at just 5.88% per annum.
- APR refers to the annual interest rate accrued on a credit card if the cardholder fails to pay the bill in full. The industry average is 20-35% APR .
- The card can be applied for through Federal Bank’s mobile banking application FedMobile
Paytm partners with US-based Ria Money to enable international remittances directly into digital wallets
- Paytm has become the first payments platform in India to accept international remittances directly into a digital wallet in India, after it announced a tie-up with Ria Money Transfer, which is a cross-border money transfer firm and a part of Euronet Worldwide.
- Paytm's 333 million customers can now get money transferred directly into their accounts from their friends and relatives abroad.
- Paytm Payments Bank's Managing Director - Satish Kumar Gupta
LIC ties up with Department of Post
- LIfe Insurance Corporation of India (LiC) and Department of Post have entered into an agreement for “Print to Post” solutions.
- Print to Post solutions is provided by the Department of Posts for printing and dispatching of the policy booklet issued under a life insurance policy.
J&K Bank Received Rs 500 crore Capital from J&K Govt
- In a major boost to its capital adequacy, J&K Bank today received Rs 500 Cr from Government of J&K as capital to acquire over 16.76 Cr shares in the Bank
- Pertinently, Reserve Bank of India (RBI) recently allowed the J&K Government to acquire over 16.76 Cr shares in the Bank on preferential basis
TCS signs a 5-year IT transformation deal with German bank NORD/LB
- IT services major Tata Consultancy Services (TCS) has been selected by NORD/LB, a leading German commercial bank, as its strategic partner for its IT transformation.
- As part of the five-year partnership, TCS will work with the bank to simplify and transform its application estate across businesses–financial markets, wholesale and retail banking, through application consolidation and automation.
The Asian Development Bank (ADB) has approved a loan of $251 million for urban flood protection and management in the Chennai–Kosasthalaiyar
News Source : ET, BL, BS, FE and Mint
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