The Reserve Bank of India (RBI) placed on its Web site a discussion paper titled Emerging Trends in Regulation and Supervision of Securitization Activities of Banks.

The discussion paper is seeking to offer an update of the ongoing international work regarding the minimum holding period as well as minimum retention requirement for loans that were originated for securitization, zeroing in on the logic behind the differing opinions.

It also set the background for proposals regarding minimum lock-in period/minimum holding period (MHP) and minimum retention requirements for Indian banks.

The paper is divided into three sections.  The first section discussed the issues and proposals relating to the lock-in and minimum holding periods (MHP).

The second section is focused to the issues surrounding the minimum retention requirement (MRR) and related proposals.

The third section outlined the modifications to existing guidelines proposed to be issued for banks operating in India.

In the Second Quarter Review of the Monetary Policy announced by RBI last Oct. 27, it was indicated that RBI will issue detailed guidelines regarding lock-in-period and other operational details while keeping in mind the international norms being developed.

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