RBI plans ₹1 cr minimum investment in securitisation notes: What it means for investors

The Reserve Bank of India (RBI) has proposed significant changes to the way securitisation notes are issued and traded, seeking to strengthen the country's securitisation market while ensuring that these instruments remain largely within the institutional investor universe.

In draft amendments to the Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025, the central bank has proposed making securitisation notes available only in dematerialised (demat) form and prescribing a minimum investment size of ₹1 crore at the time of issuance as well as for all subsequent transfers. The draft amendments are proposed to come into effect from October 1, 2026.

What are securitisation notes?

Securitisation is a process through which banks and financial institutions pool together loans—such as home loans, vehicle loans or personal loans—and transfer them to a Special Purpose Entity (SPE). The SPE then issues securitisation notes backed by the cash flows from these underlying loan pools.

Investors who buy these notes receive returns from the repayments made by borrowers. The arrangement allows banks to free up capital, improve liquidity and transfer part of the credit risk to investors.

What has RBI proposed?

The RBI has proposed two major changes.

First, all securitisation notes must be issued, held and transferred only in dematerialised form. This is aimed at improving transparency, operational efficiency and ease of transfer while reducing paperwork.

Second, the regulator has proposed that every investment in securitisation notes should have a minimum ticket size of ₹1 crore, both at the time of issuance and in the secondary market. The draft clarifies that the ticket size refers to the investment made by a single investor. Agreements between the originator and the Special Purpose Entity must also include provisions ensuring compliance with this requirement.

In addition, the RBI has proposed revising the definition of a public offer. Under the draft, an offer of securitisation notes will be treated as a public offer if it is made to the number of persons that meets or exceeds the limit prescribed under Regulation 21 of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, as amended from time to time.

What does this mean for investors?

The proposed ₹1 crore minimum investment effectively limits participation to institutional investors, banks, insurance companies, mutual funds, pension funds and ultra-high-net-worth investors. Retail investors are unlikely to participate directly because of the high investment threshold.

The move is also expected to improve the quality of participants in the securitisation market. Investors with the expertise to evaluate complex debt structures are generally better equipped to assess the underlying credit risks associated with loan pools.

Making securitisation notes demat-only is expected to simplify ownership transfers, improve record-keeping and align the market with broader digitisation efforts across India's financial system.

Why it matters

India's securitisation market has grown steadily over the past few years as banks increasingly use it to manage balance sheets and diversify funding sources. By standardising issuance, strengthening transfer mechanisms and restricting participation to sophisticated investors, the RBI aims to improve market transparency while supporting the orderly development of the securitisation ecosystem.

The draft amendments have been issued for consultation and, if finalised, will come into force on October 1, 2026, reshaping how securitisation notes are issued and traded in India.