What are security receipts or SRs?
A. ARCs generally acquire NPLs under a trust structure, wherein funds for financing the acquisition of NPLs are raised by issue of Security Receipts (SRs). SRs are instruments in the nature of pass through certificates, evidencing an undivided right, title or interest of the holder in the underlying assets. Only Qualified Institutional Buyers (QIBs) as defined under the SECURITSATION ACT, 2002 Act are authorised to hold or trade in SRs. QIBs include domestic investors such as banks and FIs, Insurance Companies, Trustee or ARC registered with RBI under the SECURITSATION ACT, 2002 Act, non-deposit taking Non-Banking Financial Companies satisfying certain criteria as also Foreign Institutional Investors registered with the Securities and Exchange Board of India (SEBI). The trustee periodically declares the Net Assets Value (NAV) of the SRs in terms of the NAV Guidelines issued by the RBI. As regards banks / FIs, the SRs are classified as non-SLR investments and are valued on the basis of
