NBFCs, HFCs Gain On Relaxation In Securitisation Rules

HFC companies and NBFCs gained in trade today after the Reserve Bank of India took steps to ease liquidity concerns for these firms.

On Thursday, RBI in a notification said that the minimum holding for NBFCs originating loans will be now pegged at six-monthly or 2-quarterly installments as against the earlier 12 month period. The new rules remain valid for loans with maturity term of over 5 years. The move will be of help to HFCs with loan portfolio of a longer life-span.

Also, the holding amount has been increased from 10% to 20% of the portfolio. In addition, the minimum retention requirement for such securitisation/assignment transactions is decided at 20% of the book value of the loans being securitized or 20% of the cash flows from the assets assigned.

And the relaxation on the holding period front will make more of loans eligible for securitization.

The proposed relaxation will remain valid for a period of six months from the date of release of the circular.

Some of the companies in the sector including Repco Home and DHFL by as much as 11%.

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