SEBI securitisation tweaks: 5 SDI proposals for 2026

What SEBI has proposed and why it matters

The Securities and Exchange Board of India (SEBI) has proposed targeted amendments to its rules for securitised debt instruments (SDIs) to align them with the Reserve Bank of India’s (RBI) 2021 directions on securitisation of standard assets. The proposals were released through a consultation paper dated May 4, 2026, and public comments have been invited until May 25. SEBI’s stated objective is to remove frictions that have held back the growth of India’s listed securitisation market and to harmonise requirements across regulators. The changes focus on concentration limits, disclosure responsibility, governance of special purpose distinct entities (SPDEs), group-entity restrictions, and the handling of trustee-related events.

The wider regulatory context: multiple changes cleared

The securitisation consultation comes alongside other recent regulatory moves referenced in the same context. SEBI approved the reintroduction of open-market buybacks through stock exchanges, eased intraday borrowing for mutual funds, enabled faster approvals for alternative investment funds (AIFs), and moved to align norms for securitised debt instruments with RBI rules. Together, these steps reflect an emphasis on process efficiency, disclosure clarity, and regulatory alignment. Within that broader set of decisions, the SDI proposals are designed to make listed securitisation structures easier to execute while retaining governance and transparency checks.

Proposal 1: single-asset securitisation by RBI-regulated entities

A central proposal is to permit single-asset securitisation for entities regulated by the RBI. Under current SEBI rules, no single borrower can account for more than 25% of the asset pool, a concentration cap intended to reduce risk. SEBI has acknowledged that this cap has effectively blocked the listing of instruments backed by a single asset, even though RBI norms permit such structures. To address this mismatch, SEBI has proposed exempting RBI-regulated entities from the 25% single-obligor cap so that single-asset deals can be listed. This exemption is explicitly framed as being limited to entities governed by central bank norms.

Proposal 2: shift periodic disclosure duties to the servicer

SEBI has also proposed changing who is responsible for ongoing disclosures about the performance of the underlying securitised pool. Currently, the originator is responsible for periodic disclosures on pool performance. The consultation paper proposes shifting that responsibility to the servicer, recognising the servicer’s role in collections, receivables monitoring, and maintaining pool-level data. The proposal also notes that the servicer may be the originator or a third party. The change is intended to place reporting obligations with the entity closest to day-to-day cashflow and performance tracking.

Proposal 3: SPDE governance limits and removal of veto powers

On governance, SEBI has suggested that where the originator is an RBI-regulated entity, it should have no more than one representative on the SPDE’s board. SEBI has also proposed that such a representative should not hold veto powers. This is positioned as being in line with RBI guidelines, and aims to reinforce the separation between the originator and the SPDE. In practice, the proposal seeks to reduce control-related concerns while still allowing limited board representation for oversight and coordination.

Proposal 4: ease group-entity restrictions for originator and SPDE

Another proposed change addresses restrictions that currently prevent securitisation transactions between an originator and an SPDE belonging to the same group. SEBI has proposed removing this bar where the originator is regulated by the RBI, subject to RBI safeguards. The consultation notes that RBI’s framework does not prohibit such transactions as long as the originator does not exercise control over the SPDE or its trustee. By aligning the two frameworks, SEBI is seeking to remove a structural hurdle that market participants have flagged.

Proposal 5: replace winding-up requirement with trustee substitution

SEBI has proposed revising the current approach to trustee-related events. Under the existing framework, if a trustee’s registration is suspended or cancelled, the securitisation scheme must be wound up entirely. The consultation proposes a simpler mechanism: appointment of a replacement trustee rather than unwinding the transaction. SEBI has described this as resolving an awkward overlap with RBI regulations, which do not allow such transactions to be unwound. The proposed change is meant to keep transactions operational while addressing the governance issue created by trustee ineligibility.

What the consultation paper says about alignment and past changes

The consultation paper is described as part of SEBI’s effort, based on recommendations from the Corporate Bonds Advisory Committee, to close gaps between the two regulatory regimes. It also references that SEBI amended the SDI Regulations in 2024-25 with the intent to modernise the framework and align it with RBI’s securitisation directions. In the current set of proposals, SEBI has indicated it will extend an existing exemption carve-out for RBI-regulated entities, which is currently available only for certain track record conditions, to also cover the concentration cap. The overall thrust is consistency with RBI’s securitisation framework and fewer hurdles for listed market structures.

Market impact: what could change for listed securitisation

The proposals are aimed at improving structural flexibility, governance clarity, and data dissemination to investors and credit rating agencies. Allowing single-asset securitisation for RBI-regulated entities could expand the range of deals eligible for listing where concentration limits were previously a hard stop. Moving disclosures to the servicer may change reporting workflows, but it directly aligns obligations with the entity that handles collections and pool monitoring. Governance changes to SPDE board representation and veto rights reinforce separation standards that are often central to securitisation design. The trustee substitution approach is intended to avoid forced unwinds purely due to trustee registration events, which SEBI has noted can be inconsistent with RBI rules.

Key facts at a glance

What to watch next

SEBI has asked stakeholders to provide feedback on the securitisation proposals by May 25, 2026. Any final rule changes would follow after the consultation process and review of comments. Separately, SEBI’s other approvals mentioned in the same context, including the reintroduction of open-market buybacks through exchanges and faster AIF approvals, indicate continued focus on procedural changes across market segments. For securitisation participants, the next key milestone is the post-consultation outcome and the final shape of exemptions and governance requirements.