In a move to make more liquidity available to non-banking finance firms, the Reserve Bank of India has relaxed the securitisation norms by relaxing the minimum holding period requirement. The move follows a demand from the government for a special window for NBFCs, to provide them liquidity support. RBI has decided to relax the Minimum Holding Period (MHP) requirement for originating NBFCs, as they are now allowed to securitise loans with maturity of more than five years after holding them for six months on their books, as compared to one year earlier. The relaxation on the minimum holding period will be allowed when the NBFC retains 20% of the book value of these loans. The above dispensation shall be applicable to securitisation / assignment transactions carried out during a period of six months from the date of issuance of this circular.

(The Hindu)