![]() “transfer” means a transfer of economic interest in loan exposures by the transferor to the transferee(s), with or without the transfer of the underlying loan contract, in the manner permitted in these directions Įxplanation: Consequently, the transferee(s) shall “acquire” the loan exposures following a loan transfer. One of the important amendments under the TLE Directions has been the insertion of the definition of “transfer”, which is reproduced herein below. This article discusses the general concept of loan transfer and specifically delves into the ‘loan participation as a mode of such transfer. However, loan participation is not a new concept, and is quite popular in international loan markets, as we discuss below. While the loan market in India is quite familiar with assignments and novations, ‘loan participation’ to some, might appear to be an innovation by TLE Directions. Notably, the TLE Directions refer to all types of loan transfers, including sale, assignment, novation and loan participation. In fact, the scope contains an outright bar on any sale or acquisition other than under the TLE Directions, and outside permitted transferors and transferees, apart from securitisation transactions. Further, the scope of TLE Directions covers any “transfer” of loan exposure by lenders either as transferer or as transferees/acquirers. The TLE Directionshave consolidated the guidelines with respect to the transfer of standard assets as well as stressed assets by regulated financial entities in one place. ![]() ![]() The new directions have been made effective immediately which introduces several new concepts and compliance requirements. Master Directions- Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 and Master Directions- Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021, on September 4, 2021, that replaces and supersedes the existing regulations on securitisation and direct assignment (DA) of loan exposures. The Reserve Bank of India (RBI) has issued the new guidelines, viz.
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