What are the key legal provisions relating to Structured Finance in the Indian legal framework?

Search this article on Google: What are the key legal provisions relating to Structured Finance in the Indian legal framework?

Title: Understanding the Key Legal Provisions Relating to Structured Finance in India: Insights from SimranLaw


Structured Finance is a complex financial instrument offered to businesses with intricate financing needs not typically executed by conventional financial products. This type of financing is typically used to securitize assets, real estate, non-performing loans, amongst other things. SimranLaw’s experts will dissect the legal framework governing structured finance in India, providing insights drawn from years of experience to deepen your understanding of law.

Legal Provisions Relating to Structured Finance in India

The legal framework for structured finance in India is regulated mainly by the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and provisions in the Companies Act, 2013.

1. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act):

The SARFAESI Act allows banks and financial institutions to auction residential or commercial properties of defaulting borrowers. Under this Act, non-performing assets can be securitized, enabling banks to transform these illiquid assets into a tradable security.

2. The Companies Act, 2013:

The Companies Act, 2013 has certain provisions relating to debentures, which are integral to structured finance. Section 71 of the act deals with the issue and redemption of debentures, while Section 372A discusses inter-company loans and investments.

3. The RBI Guidelines:

The RBI provides guidelines on securitization transactions and norms for entry into insurance that banks must comply with. In 2006, RBI issued guidelines on securitization of standard assets which regulate the creation of special purpose vehicles (SPVs), the role of originators, and minimum holding periods.

4. SEBI Regulations:

SEBI has issued a number of regulations concerning structured products. For example, the SEBI (Issue and Listing of Debt Securities Regulations), 2008, provides comprehensive norms for the issue and listing of non-convertible debt securities.

Case Laws and Judgments

1. Mardia Chemicals Ltd. vs. ICICI Bank Ltd:

The judgment in this case paved the way for the success of securitization in India. The Supreme Court validated the constitutional validity of the SARFAESI Act, affirming that it does not violate the principles of fairness and reasonableness.

2. Essar Steel India Limited vs. Reserve Bank of India:

This judgment provided further clarity on the SARFAESI Act. The court held that the RBI’s directions on insolvency resolution are in sync with the Insolvency and Bankruptcy Code, 2016, and that the RBI is empowered to issue such directions to banking companies for resolution of stressed assets.


Structured finance, although complex, offers a viable solution for sophisticated financial needs. The legal framework in India provides a balanced regulatory environment to ensure compliance and safeguard interests. SimranLaw experts, backed by their extensive experience, are adept in providing comprehensive legal insights into structured finance within the Indian context.

One thought on “What are the key legal provisions relating to Structured Finance in the Indian legal framework?”

  1. If you have found the information provided in this article helpful and are facing similar legal challenges, we at SimranLaw, a premier law firm in Chandigarh, encourage you to reach out to us. Our proficient team of lawyers in Chandigarh and advocates in Chandigarh are highly skilled at navigating complex legal issues such as those related to Structured Finance in the Indian legal framework.

    We understand that each case is unique and requires a personalized approach. Therefore, our lawyers in Chandigarh and advocates in Chandigarh are dedicated to providing comprehensive legal solutions tailored to meet your specific needs. Whether you are looking for advice on Structured Finance or any other legal matter, SimranLaw, as an experienced law firm in Chandigarh, is equipped to guide you through the intricacies of the Indian legal system.

    Don’t let legal challenges overwhelm you. Allow our team of experienced lawyers in Chandigarh and advocates in Chandigarh to provide the legal support you need. Contact SimranLaw, your trusted law firm in Chandigarh, for a consultation today.

Comments are closed.