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Brief Overview
The RBI updated the Master Direction - Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (“updated Master Direction”), on 5th December 2022.
Technical Details:
Key highlights of the updated Master Direction are:
1) Overseas branches of Scheduled Commercial Banks shall be permitted to:
(a) Acquire only ‘not in default’ loan exposures from a financial entity operating and regulated as a bank in the host jurisdiction.
(b) Transfer exposures ‘in default’ including ‘not in default’ pertaining to resident entities to a financial entity operating and regulated as a bank in the host jurisdiction.
(c) Transfer exposures ‘in default’ including ‘not in default’ pertaining to non-residents, to any entity regulated by a financial sector regulator in the host jurisdiction.
2) Inclusion of the definition of ‘Economic Interest’.
3) It is clarified that for calculation of MHP, the ‘registration of the underlying security interest’ is with CERSAI.
4) It is clarified that the lenders which are transferors shall not extend the working capital facilities to the borrower for at least three years from the date of such transfer.
5) The updated Master Directions now provides the valuation method of Security Receipts (“SRs”) if the investment by the transferor in SRs issued against loans transferred by it is more than 10 percent of all SRs issued against the transferred asset.
For further details, please see:
Master Direction – Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021
For any queries / clarifications, please feel free to ping us and we will be happy to chat:
● Mr. Ankit Sinha (ankit.sinha@jclex.com)
● Mr. Saurabh Sharma (saurabh.sharma@jclex.com)
● Ms. Rupul Jhanjee (rupul.jhanjee@jclex.com)