SEBI’s draft changes to SDI Regulations: Full alignment with RBI’s securitisation regime for REs

The Securities and Exchange Board of India has circulated a detailed proposal to amend the Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) to bring them in line with the Reserve Bank of India’s latest securitisation framework issued in 2025.

The changes specifically target securitisation transactions where the originator is a Reserve Bank of India – Regulated Entity (RE), such as commercial banks, NBFCs, HFCs, All India Financial Institutions and Small Finance Banks. The objective is to remove regulatory frictions between SEBI’s listing regime and RBI’s prudential rules so that more securitised debt instruments (SDIs) can access the listed securities market.

SEBI’s proposals focus on five key areas:

  1. Allowing single asset securitisation for RBI-regulated originators
  2. Shifting certain ongoing disclosure and certification obligations from the originator to the servicer
  3. Tightening norms for the composition of the Board of Trustees of Special Purpose Distinct Entities (SPDEs) where the originator is an RBI-regulated entity
  4. Clarifying that an originator and SPDE belonging to the same group can transact, while maintaining restrictions related to the trustee’s group
  5. Replacing automatic scheme winding-up in case of trustee’s registration suspension/cancellation with appointment of a new trustee, while retaining a residual power to order winding up in investors’ interest

These amendments arise from:

  • Feedback from RBI pointing out divergences between the two frameworks
  • Deliberations in the Corporate Bonds Advisory Committee (CoBoSAC)
  • A public consultation process conducted via a SEBI consultation paper
  • The broader policy goal of deepening the listed securitisation market in India

1. Background and context

1.1 Securitisation and current market landscape

Securitisation involves pooling financial assets or receivables and converting them into SDIs, where cash flows from the underlying pool are passed through to investors.

As of 31 March 2026:

  • Total outstanding SDIs amounted to about INR 5.06 Lakh Crore
  • Of this, INR 53,881 Crore was listed on stock exchanges

Currently:

  • Banks, NBFCs and HFCs largely undertake securitisation under the RBI’s prudential securitisation framework
  • Non-RE corporates issue SDIs under the SDI Regulations

SEBI had earlier aligned the SDI Regulations with the Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 (RBI SSA Directions) via amendments approved on 18 December 2024 and notified on 5 May 2025.

However, the RBI SSA Directions have since been superseded by the following 28 November 2025 directions (collectively referred to as the “RBI securitisation framework”):

  • Reserve Bank of India (All India Financial Institutions – Securitisation Transactions) Directions, 2025
  • Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025
  • Reserve Bank of India (Non-Banking Financial Companies – Securitisation Transactions) Directions, 2025
  • Reserve Bank of India (Small Finance Banks – Securitisation Transactions) Directions, 2025

RBI highlighted to SEBI that certain aspects of the SDI Regulations were still not fully aligned with the revised RBI securitisation framework for transactions originated by REs, causing avoidable inconsistencies and constraining listing.

1.2 Consultation process and stakeholder feedback

SEBI issued a consultation paper titled “Consultation paper on amendments to the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008” on 04 May 2026 (Annexure A to the Board Memorandum).

Key aspects of the consultation:

  • 62 responses were received:
    • 59 comments submitted through the online portal
    • 3 comments received by email
  • For the quantitative analysis of support levels, only online responses indicating an explicit agreement level (strongly agree / agree / partially agree / disagree / strongly disagree) were tabulated.

The broad response pattern was as follows:

  • Proposal I – Single asset securitisation for RBI-regulated originators

    • 13 counted responses
    • 11 (86%) agreed or strongly agreed
    • 1 (7%) partially agreed
    • 1 (7%) disagreed or strongly disagreed

  • Proposal II – Disclosures and certifications by ‘Servicer’ instead of only by originator

    • 12 counted responses
    • 10 (84%) agreed or strongly agreed
    • 1 (8%) partially agreed
    • 1 (8%) disagreed or strongly disagreed

  • Proposal III – Restriction on originator’s representation on SPDE Board (for RBI-regulated originators)

    • 11 counted responses
    • 10 (91%) agreed or strongly agreed
    • 1 (9%) partially agreed
    • 0 (0%) disagreed

  • Proposal IV – Clarification that originator and SPDE may be from same group (subject to trustee-related restriction)

    • 11 counted responses
    • 8 (73%) agreed or strongly agreed
    • 2 (18%) partially agreed
    • 1 (9%) disagreed or strongly disagreed

  • Proposal V – Appointment of new trustee instead of mandatory winding-up of schemes

    • 12 counted responses
    • 10 (84%) agreed or strongly agreed
    • 1 (8%) partially agreed
    • 1 (8%) disagreed or strongly disagreed

While the majority supported SEBI’s approach across all proposals, some respondents raised specific concerns or suggested refinements. These detailed comments and SEBI’s responses are captured in Annexure B of the Board Memorandum.

2. Detailed overview of proposed amendments

2.1 Proposal I – Enabling single asset securitisation by RBI-regulated originators

2.1.1 Current regulatory position under Regulation 19A

Regulation 19A sets conditions for securitisation leading to the issuance of SDIs. A key requirement is:

“(a) No obligor shall have more than twenty five percent in asset pool at the time of issuance.”

The regulation also provides that: