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Securitisation Companies/ Reconstruction Companies Prudential Norms (Reserve Bank) Directions, 2002

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The Reserve Bank of India, having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Securitisation Company/Reconstruction Company from being conducted in a manner detrimental to the interest of investors or in any manner prejudicial to the interest of such Securitisation Company/Reconstruction Company, it is necessary to issue the directions relating to the prudential norms as set out below hereby, in exercise of the powers conferred by Section 12(1) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002, issues to every Securitisation Company/Reconstruction Company, the directions hereinafter specified.

Short title, commencement and applicability of the directions

  1. (1) These directions shall be known as the "Securitisation Companies/ Reconstruction Companies Prudential Norms (Reserve Bank) Directions, 2002".

    (2) These directions shall come into force with effect from ....................

    (3) All the provisions of these directions shall apply to transactions relating to securitisation / reconstruction of financial assets undertaken by Securitisation Companies/Reconstruction Companies registered with the Reserve Bank of India under Section 3(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002.

    Definitions

  2. (1) For the purpose of these directions, unless the context otherwise requires: -

    i. "Date of acquisition" means the date on which all ''significant risks and rewards'' of ownership of financial assets have been acquired by Securitisation Company/Reconstruction Company irrespective of whether or not physical transfer of secured assets has taken place or agreement has been entered into.

    "Non-performing Asset" means an asset in respect of which

    a. interest or principal (or instalment thereof) is overdue for a period of more than 180 days;

    b. interest for principal is overdue for a period of more than 180 days from the expiry of planning period, wherever applicable;

    c. any other receivable, if it is overdue for a period of more than 180 days.

    iii. "Ordinance" means the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002;

    "Overdue" means an amount which remains unpaid beyond the due date;

    "Owned Fund" means aggregate of paid up equity capital, preference shares which are compulsorily convertible into equity and free reserves as reduced by accumulated balance of loss, deferred revenue expenditure, book value of intangible assets and under / short provision against NPA/diminution in value of investments, and over-recognition of income, if any...

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