Mumbai, July 27 -- The Reserve Bank of India (RBI) is seeking to tighten oversight of the securitization market, proposing stricter rules on who can hold these instruments and how they are traded as it looks to reinforce transparency and market discipline.

In draft amendments released on Monday, the RBI proposed mandating that securitization notes issued by commercial banks be issued, held and transferred only in dematerialized form. It also proposed extending the existing minimum investment requirement of Rs.1 crore beyond the point of issuance to every subsequent transfer of these securities, ensuring they remain largely in the hands of institutional and sophisticated investors.

The central bank has invited stakeholder comments on the...