Mumbai: As recommended by the Task Force on Development of Secondary Market for Corporate Loans, the RBI will facilitate the setting up of a self-regulatory body (SRB) as a first step towards the development of the secondary market for corporate loans.
The SRB will be responsible for standardising documents, covenants and practices related to secondary market transactions in corporate loans and promoting the growth of the secondary market in line with regulatory objectives, it said.
In India's context, corporate loans both standard and Non-Performing Assets (NPAs) have been transferred from banks to other lenders and Asset Reconstruction Companies (ARCs).
However, this inter-bank bilateral transactions of loan accounts have been relatively infrequent.
As regards the securitisation market, it has mostly evolved in the retail segment and there has been no major breakthrough in the corporate portfolio.
To overcome these hurdles, the RBI constituted a task force to examine the development of secondary market for corporate loans and make recommendations to facilitate rapid development of this market.
With a view to expand peer to peer (P2P) lending platform business, the Reserve Bank raised aggregate lending limit by five times to Rs 50 lakh for such lenders.
At present, the aggregate limits for both borrowers and lenders across all P2P platforms stand at Rs 10 lakh, whereas exposure of a single lender to a single borrower is capped at Rs 50,000 across all NBFC-P2P platforms.
"A review of the functioning of the lending platforms and lending limit was carried out and it has been decided that in order to give the next push to the lending platforms, the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of Rs 50 lakh," the RBI said in its statement on developmental and regulatory policies.
Further, it has also proposed to do away with the current requirement of escrow accounts to be operated by bank promoted trustee for transfer of funds having to be necessarily opened with the concerned bank.
This will help provide more flexibility in operations and necessary instructions in this regard will be issued shortly, it said.
Commenting on announcement, NBFC-P2P platform Finzy head of product Apoorv Gawde said the decision will help expand the industry and increase the confidence of investors in the asset class.
"It will help building scale in two major forms - existing investors who have experienced the power of P2P will now get an opportunity to increase their participation and a new segment of HNI investors will also begin to see the value of this asset class thanks to the increased limits," he said.
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The statement further said a number of commercial banks, urban cooperative banks and other regulated entities are dependent upon third party application service providers for shared services for ATM Switch applications.
Since these service providers also have exposure to the payment system landscape and are, therefore, exposed to the associated cyber threats, it has been decided that certain baseline cyber security controls will be mandated by the regulated entities in their contractual agreements with these service providers, it said.
"The guidelines would require implementation of several measures to strengthen the process of deployment and changes in application softwares in the ecosystem; continuous surveillance;
implementation of controls on storage, processing and transmission of sensitive data; building capacity for forensic examination; and making the incident response mechanism more robust," it said.
Detailed guidelines in this regard will be issued by month-end, it added.
The Reserve Bank of India also announced a slew of measures, including bringing all urban cooperative banks (UCBs) with an asset base of Rs 500 crore and more under the ambit of the CRILC reporting framework, a development that will help in curbing PMC Bank type of frauds.
The RBI has created a Central Repository of Information on Large Credits (CRILC) of scheduled commercial banks, all-India financial institutions and certain non-banking financial companies with multiple objectives, which, among others, include strengthening offsite supervision and early recognition of financial distress, according to the RBI's Statement on Developmental and Regulatory Policies.
"With a view to building a similar database of large credits extended by primary UCBs, it has been decided to bring such entities with assets of Rs 500 crores and above under the CRILC reporting framework," it said.
Detailed instructions in this regard will be issued by the end of the month, it said.
