Beyond Syndication: Unlocking the Power of Single-Asset Securitisation

by Amrita Agarwal and Harsh Vardhan.

An overlooked yet transformative pillar of India’s evolving securitisation framework is the newfound empowerment of lenders to undertake the securitisation of a single, standard asset (Master Direction – Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021. RBI/DOR/2021-22/85, September 24, 2021). To appreciate the magnitude of this shift, one must first look at the historical contours of the Indian market. Traditionally, securitisation has been synonymous with "pass-through certificates" (PTCs) backed by granular pools of consumer debt—typically vehicle and personal loans or microfinance receivables. The market has also frequently, if somewhat inaccurately, applied the term to "direct assignments," where loan portfolios are sold outright between lenders.

Indian securitisation has long been a predictable, if somewhat narrow, affair. Historically, the market has been the domain of "pass-through certificates" (PTCs)—complex bundles of granular consumer debt, ranging from tractor loans in Punjab to microfinance receivables in Tamil Nadu. The logic was simple: there is safety in numbers. By pooling thousands of small loans, lenders could hedge against individual defaults, creating a diversified product for investors.

In September 2021, the Reserve Bank of India (RBI) issued a comprehensive new framework. The impact on traditional volumes was immediate. PTC transactions, which languished at a modest ₹0.33tn in the 2021 financial year, surged beyond ₹1tn by 2024. Data from the first half of 2025 suggests the market is reaching critical mass, with volumes already beyond ₹0.7tn.

Yet the true significance of the 2021 guidelines lies not in the scaling of the old model, but in the birth of a new one. In a radical departure from the "diversified pool" orthodoxy, the new regime permits a lender to carve out a single, standard project loan, house it in a bankruptcy-remote trust, and issue securities against that solitary asset.

It is the "securitisation of one" -- a sweet insight that is one pioneer away from becoming a market reality.

Breaking the CLO Mould

Globally, the securitisation of commercial credit is a mature, if occasionally notorious, discipline dominated by Collateralised Loan Obligations (CLOs). But the Indian iteration is a distinct breed. A typical European or American CLO might bundle 150 different corporate loans to achieve the "granularity" required for a triple-A rating.

India’s provision, by contrast, allows for the atomisation of a single, massive exposure. This offers banks unprecedented agility in managing the long-tenure, high-ticket exposures inherent in infrastructure finance.

Until now, such projects were managed through the consortium model: a cumbersome, 20th-century process where a lead bank manages a gaggle of lenders or "down-sells" portions of the debt to stay within internal risk limits. Crucially, under syndication, the loan remains an illiquid fixture on the balance sheet. Single-asset securitisation changes the chemistry of the transaction, turning a private contract into a tradable financial instrument.

Efficiency by design

The single-asset model introduces a surgical approach to capital efficiency. Under RBI rules, a fully disbursed project loan becomes eligible for securitisation after a six-month "minimum holding period." This timing is strategic.

In the volatile world of infrastructure, early-stage risks -- regulatory bottlenecks, environmental clearances, and land acquisition disputes -- are at their most acute during the first shovel-load of dirt. By the time a loan is fully disbursed and has survived its first six months, these foundational uncertainties have typically receded.

Securitising at this juncture allows a bank to capture the higher yields associated with the high-risk inception phase, only to exit and free up capital just as the asset settles into the boring, predictable cash flows of a stable utility.

Beyond individual relief, this mechanism addresses two systemic vulnerabilities that have long haunted the Indian subcontinent:

1. The Asset-Liability Mismatch: Indian banks are perennially caught in the "borrow short, lend long" trap: using three-year deposits to fund 20-year power plants. Securitisation provides a vital exit valve, moving long-dated assets off the books.
2. Broadening the Investor Base: By transmuting a private loan into a security, the industry can tap into the deep pockets of institutional liquidity. Insurance companies and pension funds, which crave long-duration cash flows, have historically lacked a direct route to project-level credit without taking on the broader, often messy, corporate risk of the developer.

The friction points

If the advantages are so compelling, why has the market not yet ignited? The answer lies in a combination of dormant private capital expenditure and significant fiscal friction.

For the better part of the last decade, India’s infrastructure story has been a public sector affair, financed largely through the bond markets. As the private sector begins to re-engage, two primary hurdles remain:

The stamp duty trap

The primary hurdle is the prohibitive cost of registration. In many Indian states, transferring a loan to a trust can incur charges of between 3% and 4%. While some states have capped this at 1% for pooled assets (creating regional hubs for securitisation) the single-asset model remains burdened by archaic fees. Analysts argue that state governments must act in their own enlightened self-interest to reduce these frictions if they wish to see infrastructure projects in their backyard funded efficiently.

The Regulatory Glass Ceiling

Current Securities and Exchange Board of India (SEBI) regulations present a barrier. Rules for listed securitised debt instruments require that no single obligor represents more than 25% of the asset pool. This effectively bans single-asset securities from being listed on recognized exchanges.
This lack of listing creates a domino effect. Insurance companies, governed by strict IRDAI mandates, are generally restricted to "approved investments" that must be listed. Without a SEBI carve-out, the senior, high-quality tranches of these deals (precisely what insurers want to buy) remain off-limits. Furthermore, under Minimum Retention Ratio (MRR) rules, the originating bank must keep a 10% "skin in the game," usually the junior "equity" tranche. This leaves the "Senior Tranche" looking for a home that current listing rules effectively block.

How this fits into Indian economic growth

As the private capex cycle begins its long-awaited ascent, the demand for sophisticated financing tools will be immense. The "securitisation of one" is no longer a mere regulatory curiosity or an academic exercise. It is a vital instrument for a banking sector that must fund a nation's growth without choking on the resulting long-term risk. For the pioneer who manages to navigate the stamp duty and the listing hurdles, the rewards and the market share will be substantial.

The framework is there. The assets are coming. All that remains is for the market to move beyond the safety of the pool and embrace the power of the one.

The authors are experts on finance and public policy.

Are all regulators equal? The Supreme Court doesn't think so

by Chitrakshi Jain and Bhavin Patel.

Introduction

The judiciary has played a very important role in the development of the regulatory state in India. Thiruvengadam and Joshi (2013) argue that this is dissimilar to the evolution of the regulatory state in the global North, where courts have been marginal actors. In contrast, the Indian Supreme Court, they reveal, has on multiple occasions mediated conflicts that arose during the reform of telecom regulation and in this process imparted institutional credibility to the sectoral regulator. Consequently, the Supreme Court's role in designing the regulatory state should be studied more closely. In this article, we examine the implications of select Supreme Court decisions which shape the characterisation of regulators' functions and their appellatory rights.

It bears repeating that regulators in India accumulate executive, legislative, and quasi-judicial functions. This accumulation of functions combined with ambiguous laws that outline the powers of regulators has led to a scenario where the courts have been asked to clarify the character and nature of functions and the corresponding appellate remedies.

Regulators in India are not similarly situated vis-a-vis the powers that they have been bestowed with. This complicates matters even further. In the case of utilities, regulators are tasked with the crucial function of determining tariffs (amongst others). The allocation of this function to regulators was critical in ensuring that these sectors are depoliticised, for state governments perceivably manipulate rational determination of tariff to advance their political interests. Regulators are instead expected to rely on their expert knowledge and make tariff determination a rational and efficient exercise which protects consumer interest.

In three decisions, PTC v CERC (2010), GRIDCO v Western Electricity Supply Company of Orissa Ltd and Ors. (2023), and AERA v Delhi International Airport Ltd. (2024), the Supreme Court has been asked to rule on the nature of tariff determination in regulators, especially the various Electricity Regulatory Commissions (ERCs). In this article, we examine how these decisions have shaped regulatory practices and study whether the interventions by the Supreme Court have:

1. been consistent in identifying the nature of tariff determination across regulators;
2. led to inconsistency in the substantive appellate rights of regulated entities in sectors governed by different regulators.

We first outline the reasoning from the recent decisions of the Supreme Court on tariff determination. We proceed to identify the challenges they create for the development of regulatory theory in India generally. Lastly, we conclude with the suggestion to legislate based on principles that should apply uniformly across regulators.

Judicial decisions

The PTC, GRIDCO, and AERA decisions have a bearing on the following issues:

1. What is the nature of tariff determination? Is it a quasi-judicial function?
2. Can a regulator prefer an appeal against an adverse appellate order which modified or overruled the regulator's tariff order?

In PTC, the Supreme Court was asked to clarify whether APTEL has the power of judicial review and the authority to decide on the validity of regulations made by the Central Electricity Regulatory Commission (CERC). In the course of its reasoning, the Court observed that tariff determination, while being legislative in character, is made quasi-judicial in the context of the CERC because the Electricity Act, 2003 (Electricity Act) has made tariff orders appealable to APTEL. The judgment was rendered by a constitution bench (5 judge) of the Court and limited the scope of its application to the statutory scheme in the Electricity Act. This has not stopped parties from invoking the reasoning given in PTC in matters where other regulators are involved. For example, counsels for Delhi International Airport Ltd., in AERA placed reliance on PTC to argue that tariff determination is a quasi-judicial function.

In GRIDCO, a division bench of the Supreme Court developed upon the reasoning in PTC (that tariff determination is a quasi-judicial function) and extended it to argue that it would be improper for regulators to prefer appeals against orders of the APTEL to the Supreme Court. While the Court did not sufficiently explain its reasoning, it implies that regulators cannot be parties to appeals against orders which are passed while discharging a quasi-judicial function.

Finally, in AERA, a full bench of the Court clarified the law on impleadment of regulators as parties in appeals. It held that while an authority discharging a quasi-judicial function should not be impleaded as a party to an appeal, such an authority must be impleaded as a respondent in an appeal against its order if it was issued in exercise of its regulatory role or if its participation can further effective adjudication. The Court said that the PTC judgment should be treated as authoritative only to argue that classifying tariff determination as legislative or an adjudicatory function should depend on the statute which distributes the powers to the relevant authority. To hold that AERA is allowed to appeal, the Court after reading the statute argues that tariff determination for aeronautical services is a 'regulatory' function.

Collectively read, these judgments fall short of clearly articulating an objective criteria for demarcating the different functions exercised by regulators. Consequently, these determinations have to be located in the laws that create each individual regulator, and post facto by judicial interpretation. The lack of a well-defined objective criteria for identification of different functions has serious implications for Indian regulatory theory.

Problems for regulatory theory

These cases raise three major problems for Indian regulatory theory:

SRAs are treated differently

While PTC and GRIDCO hold that tariff determination by ERCs is a quasi-judicial function, AERA holds that a similar exercise by the regulator would be a 'regulatory' function. All three cases rely on interpretations of the SRAs' parent statutes to arrive at this conclusion. The judicial discussion hinges on points such as whether the statute provides an appellate mechanism against tariff determination orders. But this does not answer the question of what the core characteristics of quasi-judicial or regulatory functions are. This is ad hoc and intricate statutory interpretation which does not illuminate any underlying principles of Indian regulatory jurisprudence.

While GRIDCO casts doubts on an ERC's ability to file an appeal against an adverse APTEL order on an appeal from its quasi-judicial orders (which, as we have noted above, include tariff determination orders), AERA can file appeals against TDSAT orders arising out of its tariff determination orders. This creates an arbitrary distinction between these two SRAs. The court decisions turn on intricate statutory interpretation, but do not tell us anything about the distinguishing features of the underlying nature of tariff determination at these two SRAs.

No ex ante certainty on nature and appealability of orders

Since no clear rules emerge from these decisions regarding how to distinguish between quasi-judicial and regulatory orders, or whether SRAs can file appeals against adverse appellate tribunal decisions in appeals against their quasi-judicial orders, there is no clarity on these points as regards other SRAs. Whether a particular order passed by an SRA is quasi-judicial or regulatory, or whether it can file an appeal to defend such orders, has to be decided on a case-by-case basis. The answers to these questions can only obtain certainty when the Court pronounces on them.

This means that there is no ex ante conclusive answer to these questions in Indian regulatory jurisprudence. SRAs, regulated entities, and other concerned parties have a tough enough job navigating the maze of Indian regulatory case law as matters stand - they do not need the added uncertainty created by these decisions to make things worse. It is also deeply concerning that fundamental questions about character of functions and right to appeal are being decided decades after these laws were enacted.

The lack of ex ante clarity on these matters also complicates the job of the appellate tribunals, who have to justify choosing between precedents that are not consistent with each other. For example, very recently APTEL had to carefully navigate its way through PTC, GRIDCO and AERA to justify placing reliance on AERA and argue that tariff orders are also legislative and regulatory in character and that regulators should be allowed to defend their orders.

APTEL becomes the final authority on tariff determination

Tariff determination is delegated to ERCs via legislative mandate. The reasons traditionally offered for this include sectoral expertise and independence from the political executive. In addition, we may note that ERCs are much closer to the ground, as it were, and have (or should have) access to much more information about factors for tariff determination. As such it is ERCs, and nobody else, who should determine tariffs.

But if an ERC passes a tariff determination order, and APTEL sets it aside or modifies it, then the ERC cannot file a second appeal before the Supreme Court, even when they are the only contesting parties. This effectively means that APTEL's decision on tariff determination automatically trumps the decision of the expert body specifically identified by Parliament to take such decisions. Additionally, if APTEL makes an erroneous decision, the possibility of it being corrected is diluted unless regulated entities challenge it before the Supreme Court.

This amounts to an egregious violation of the principle of separation of powers across Parliament and the judiciary.

Conclusion

The problems identified above all point to the need for a better theory of institutional design for Indian regulators. One can take the view that this is still a relatively new area of Indian jurisprudence, since regulators are (other than the RBI) a fairly modern addition to the structure of the Indian government. That said, the ERCs were created in 1998, and it has been 28 years since. Similarly, it has now been well over three decades that SEBI was established, and over a quarter of a century since TRAI was set up. Surely enough jurisprudential mileage has been accumulated now to warrant some stock-taking:

1. We need a clear articulation of the different types of functions that regulators may discharge, and a categorisation of these functions into the three broad heads of executive, quasi-legislative, and quasi-judicial. Such a theoretical categorisation is necessary because judicial interpretation has led to varying, ad hoc categorisation across SRAs. Without a strong justification - which cannot be based on statutory hair-splitting - this is arbitrary, since it means that regulated entities in different sectors are treated differently. Calling a function 'quasi-judicial' means something: appellate rights exist, and certain judicial procedures have to be followed in discharging them; calling it 'executive' means limited grounds of judicial review are available through writ proceedings, and fewer procedural safeguards apply.
2. The Tinbergen Rule may help here - for each policy target a regulator is expected to influence (tariffs, enforcing regulation, contractual disputes, etc.), they must use a distinct instrument. This way each policy target stands a better chance of being achieved, and no conflicts arise from attempts to use the same instrument to achieve multiple targets. Law makers will have to think harder about the specific targets they want regulators to achieve, and for each, describe the instrument they must use. This legislative prophylaxis eliminates the risk of contradictory judicial interpretations later.
3. Pertinently, in its 31st report, the Parliamentary Standing Committee on Energy reviewed the Electricity Bill 2002 and acknowledged that assigning all the three functions to the same institution can create challenges and had asked for a reconsideration of the clauses assigning functions to the regulators. It is unclear whether a careful examination of the relevant provisions has since been undertaken; however, the implications of not delineating the functions in the statute itself can be seen in the repeated litigations before the courts.
4. Tariff rationalisation is listed as an objective in the long title of the Act. Regulators have expertise and independence from the executive, hence they are entrusted with such functions in infrastructure industries like electricity. Regulators are also obliged to ensure costs are efficiently allocated and consumer interest is protected at the same time. If we expect regulators to be accountable, they should also have the right to defend their decisions on tariff determination in a second appeal; not allowing this prevents them from discharging their function effectively.
5. Given the need for a uniform theory across regulators, and the need to avoid ex post determination through the judicial machinery, the categorisation of functions we propose should be done through a statutory instrument. The American Administrative Procedure Act is one example of how this can be done. It is possible that new functions emerge with changing circumstances; these can be addressed through amendment, rather than judicial review.

These measures will help achieve the goals of uniformity across regulators, non-arbitrariness in classification of functions, and greater certainty and predictability for regulated entities. The current proliferation of judicially-determined, ad hoc rules is undesirable, and helps with none of these objectives.

References

Judiciaries as Crucial Actors in Regulatory Systems of the Global South: The Indian Judiciary and Telecom Regulation (1991-2012) by Arun K Thiruvengadam and Piyush Joshi [2013] Oxford University Press.

Electricity Tariffs by Javier Reneses, María Pía Rodríguez and Ignacio J.P. Arriaga [2013] Springer.

Chitrakshi Jain and Bhavin Patel are researchers at the TrustBridge Rule of Law Foundation and would like to thank Renuka Sane and Ajay Shah for useful feedback.