RBI asks banks to conduct stress test on their securitisation

The stress tests should cover various factors like rise in default rates in the underlying portfolios in a situation of economic downturn, rise in pre-payment rates due to fall in rate of interest or rise in income levels of the borrowers leading to early redemption of exposures, the RBI said

Mumbai: In order to ensure an orderly and healthy growth of securitisation market, the Reserve Bank of India (RBI) on Monday asked banks to perform stress tests at regular intervals to ensure that they are not exceeding the prudential limits............

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