SEBI Notifies Amendments to the Securitised Debt Instruments and Security Receipts Regulations, 2026

 Notification No. SEBI/LAD-NRO/GN/2026/304 dated July 1, 2026

Background

The Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 were originally published in the Gazette of India on May 26, 2008, vide notification no. LAD-NRO/GN/2008/12/126567. The Regulations were last amended on May 5, 2025 vide notification no. SEBI/LAD-NRO/GN/2025/247. SEBI has now notified a further set of amendments, styled as the Securities and Exchange Board of India (Issue and Listing of Securitised Debt Instruments and Security Receipts) (Amendment) Regulations, 2026, exercising powers under sub-section (1) of Section 30 of the Securities and Exchange Board of India Act, 1992. The amendments come into force from the date of their publication in the Official Gazette.

Key Amendments

1. Restriction on Board Representation of RBI-Regulated Originators (Regulation 9)

Regulation 9(9) has been amended to insert a proviso stating that where the originator is an entity regulated by the Reserve Bank of India, it shall not have more than one representative on the board of the Special Purpose Distinct Entity (SPDE), and such representative shall not carry veto power. This amendment appears intended to prevent RBI-regulated originators from exercising disproportionate control over SPDE governance.

2. Prohibition on Acquisition of Debt from Related-Party Originators (Regulation 10)

Sub-regulation (3) of Regulation 10 has been substituted in its entirety. The revised provision prohibits an SPDE from acquiring any debt or receivables from an originator that is either (a) part of the same group as the trustee, or (b) under the same control as the trustee. This strengthens the independence requirement between the trustee and the originator, addressing potential conflicts of interest in securitisation transactions.

3. Replacement of "Originator" with "Servicer" (Regulations 10A and 11)

A significant terminological shift has been introduced across Regulation 10A and Regulation 11(3):

• In Regulation 10A(1) and 10A(2), references to "originator" have been substituted with "servicer," and the words "as made by the originator" have been omitted from sub-regulation (2).
• In Regulation 11(3), clause (h) similarly substitutes "originator" with "servicer." Clause (j) replaces "originator" (following "auditor(s) of") with "servicer" and omits the phrase "as made by the originator." Clause (k) substitutes "originator" with "servicer" at both occurrences.

This change realigns disclosure, audit, and reporting obligations with the entity actually responsible for servicing the underlying debt, rather than the originator, which may not always perform servicing functions.

4. Relaxation of Track Record Condition (Regulation 19A)

The first proviso to Regulation 19A has been amended to remove the requirement pertaining to "track record" as a condition, and clause (a) has been added to the set of clauses referenced alongside clauses (d) and (e). This effectively broadens the scope of the exemption available under the proviso.

5. Additional Trigger Event for Winding Up (Regulation 20)

Regulation 20 has been amended to insert the words "any of" before the list of trigger events, and a new clause (d) has been added, empowering SEBI to direct winding up "in the interest of the investors." This introduces a discretionary regulatory trigger independent of the pre-existing contractual or default-based triggers.

6. Trustee Replacement Mechanism in Place of Scheme Winding Up (Regulation 45)

Regulation 45(2) previously required winding up of schemes of the SPDE upon suspension or cancellation of the trustee's registration. This has now been replaced with a requirement for appointment of a new trustee in place of the trustee whose registration is suspended or cancelled. The accompanying Explanation to this sub-regulation has been omitted. This amendment is investor-friendly, as it avoids premature winding up of SPDE schemes merely due to a change in trustee status.

7. Additional Risk Disclosure Requirement (Schedule V)

Schedule V, Clause 5.0 has been amended to renumber the existing sub-clause (l) as sub-clause (m), and a new sub-clause (l) has been inserted requiring disclosure of "concentration risk arising due to single asset securitisation." This adds a specific, targeted risk disclosure applicable to single-asset securitisation structures.

Analysis

Taken together, these amendments reflect three broad regulatory objectives: (i) reinforcing independence and governance safeguards at the SPDE level, particularly concerning RBI-regulated originators and trustee-originator relationships; (ii) recalibrating regulatory terminology to more accurately reflect functional roles within securitisation structures; and (iii) enhancing investor protection through expanded SEBI intervention powers and more granular risk disclosures.

Market participants involved in structuring, trusteeship, or servicing of securitised debt instruments should review existing SPDE documentation, trust deeds, and disclosure formats to ensure alignment with the amended framework.