The Reserve Bank of India on Wednesday said every securitisation company or reconstruction company should maintain, on an ongoing basis, a capital adequacy ratio of not less than fifteen per cent of its total risk weighted assets.

Further every such company seeking its registration will need to have a minimum owned fund of Rs 2 crore.

The central bank, which issued final guidelines and directions for SC/RCs, said that these companies can raise funds via the instrument of security receipts issued by the trust (s) set up by them.

The trust(s) will issue security receipts only to qualified institutional buyers and hold and administer the financial assets for the benefit of the qualified institutional buyers.

Every SC/RC should frame a 'financial asset acquisition policy' within 90 days of grant of certificate of registration.

This will, among others, cover norms and procedures for acquisition and types and desirable profile of assets. The SC/RC should transfer the assets to the trust(s) at the price at which those were acquired from the originator.

The risk-weighted assets are be calculated as the weighted aggregate of on balance sheet and off balance sheet items: Cash and deposits with scheduled commercial banks (zero per cent); investments in government securities (zero per cent); other assets (100 per cent); and all contingent liabilities (50 per cent). Shares held by an SC/RC in other securitisation companies or reconstruction companies shall not attract any risk weight.

Every SC/RC shall, after taking into account the degree of well-defined credit weaknesses and extent of dependence on collateral security for realisation, classify the assets into the following categories, namely: (a) standard assets (b) non-performing assets.

The non-performing assets shall be classified further as (a) sub-standard asset (b) doubtful asset (c) loss asset.

Every SC/RC shall make a general provision of 10% of the outstanding NPAs in the case of substandard assets. In the case of doubtful assets the provision required is (1) 100% provision to the extent the asset is not covered by the estimated realisable value of security; (2) in addition to item (1) above, 50% of the remaining outstanding. In the case of loss assets the entire asset shall be written off.

A policy laying down the broad parameters for rescheduling of debts due from borrowers should be formulated by the SC/RC. The proposals should not materially affect the asset liability management of the SC/RC or the commitments given to investors.

Every SC/RC should not only frame a policy laying down the broad parameters for settlement of debts due from borrowers but also draw up, within the planning period, a plan for realisation of assets.

The plan for realisation shall clearly spell out the steps proposed to reconstruct the assets and realise the same within a specified timeframe, which shall not in any case exceed five years from the date of acquisition.

A SC/RC, may as a sponsor and for the purpose of establishing a joint venture, invest in the equity share capital of a securitisation company or reconstruction company formed for the purpose of asset reconstruction.

It may deploy any surplus available with it only in government securities and deposits with scheduled commercial banks in terms of a policy framed in this regard by its board of directors.

No SC/RC shall invest out of its owned fund in land and building, provided that this restriction will not apply to funds borrowed as also to owned fund in excess of the minimum prescribed.

The central bank has cautioned the SCRCs against exercising the measures of take over of management, sale or lease of the borrowers' business as provided for in section 9 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, until final guidelines in this regard are notified by it.

The RBI is in the process of framing a set of standard guidelines in the matter of takeover of the management, sale or lease of whole or part of the business of the borrower.