To develop the securitisation market in India, the Reserve Bank of India on Monday came out with draft guidelines, which amongst other things, attempts to align the regulatory framework with the Basel guidelines.
In financial parlance, securitisation involves transactions, where credit risk in assets are redistributed by repackaging them into tradeable securities with different risk profiles.
This process gives investors of various classes access to exposures which they, otherwise, will be unable to access directly.
However, securitisation structures are complicated and opaque.
Accordingly, the guidelines proposed that definition of securitisation has been modified to allow single asset securitisations.