Simple explanation

Securitised Debt Instruments (SDIs) are when loans are bundled together and sold as bonds. Right now, SEBI’s rules say a pool can’t have more than 25% from one borrower, so you can’t securitise a single big loan. RBI already allows single-asset deals. SEBI is proposing to relax its rules for RBI-regulated entities, plus fix trustee and disclosure norms, so the market works smoother and more deals can get listed.

The core idea

1. Align SEBI with RBI: Remove the 25% single-obligor cap for RBI-regulated entities so single-asset securitisation can be listed.
2. Make SDI market practical: Shift disclosures to servicers, fix trustee replacement rules, and ease related-party restrictions to reduce roadblocks.

Key concepts

• 1. Single-asset securitisation: SEBI proposes exempting RBI-regulated originators from the 25% single-obligor limit, allowing SDIs backed by just one loan.
• 2. Why it was blocked: Current SEBI rule caps any borrower at 25% of pool to reduce concentration risk, but RBI’s 2021 framework permits single-asset deals.
• 3. Disclosure shift: Periodic performance reports on the asset pool would move from originator to servicer, who actually collects and monitors receivables.
• 4. Trustee governance: If a trustee’s registration is suspended/cancelled, appoint a new trustee instead of winding up the scheme, matching RBI norms.
• 5. SPDE board changes: For RBI-regulated originators, representation on the Special Purpose Distinct Entity board capped at one member with no veto.
• 6. Related-party easing: Remove bar on securitisation between originator and SPDE of same group if originator is RBI-regulated.
• 7. Status: Consultation paper issued May 4, 2026. Public comments open till May 25, 2026.

One analogy

Think of SDIs like selling a box of assorted chocolates. SEBI’s old rule said “no box can be >25% one flavor” to avoid risk. But RBI already lets you sell a box with just one flavor if it’s a bank’s product. SEBI now says “fine, if RBI approves the recipe, you can sell single-flavor boxes too” — and also changes who writes the nutrition label and who manages the store if the manager quits.

Common confusions

1. “SEBI is removing all diversification rules” → No
   The 25% cap is relaxed only for RBI-regulated entities. Others still follow it.

2. “Any company can do single-asset deals now” → No
   Exemption applies to RBI-regulated originators — banks, NBFCs, HFCs. Not unregulated firms.

3. “This means higher risk for investors” → Not necessarily
   Single-asset SDIs are transparent — one loan, one obligor. Risk is concentrated but visible. RBI already allows it with safeguards.

Revision table

Slide 1 — SEBI Proposes Reforms in Securitised Debt Instruments

What Happened?

• Securities and Exchange Board of India proposed reforms for the securitised debt instruments (SDI) market

• The reforms aim to align SEBI’s framework with Reserve Bank of India regulations

• SEBI proposed allowing single-asset securitisation structures for RBI-regulated entities

• Existing borrower exposure limits currently restrict single-asset securitisation

• SEBI also suggested changes in trustee roles and SPDE governance structures

Slide 2 — Why It Matters

Why This Is Important

• May increase listing of securitisation transactions

• Improves regulatory alignment between SEBI and RBI

• Could deepen India’s securitised debt market

Key Points

• Reform focus: Securitised debt instruments

• Proposed structure: Single-asset securitisation

• Applies to: RBI-regulated entities

Simple Definitions

• Securitisation: Converting assets into tradable securities

• SDI: Security backed by financial assets

• Single-Asset Securitisation: Structure backed by one asset

• Trustee: Entity overseeing investor interests

• SPDE: Special entity managing securitisation assets

Q&A Table