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Mkt for loan securitisation recovering, says Crisil

Financial institutions have securitised loans worth R3,400 crore in 38 transactions since May compared with R3,500 crore in the corresponding period last year despite tighter norms prescribed by the Reserve Bank of India, said rating agency Crisil.

Financial institutions have securitised loans worth R3,400 crore in 38 transactions since May compared with R3,500 crore in the corresponding period last year despite tighter norms prescribed by the Reserve Bank of India, said rating agency Crisil.

?There was a brief pause in securitisation activity after the issuance of the revised norms, during which time issuers accumulated eligible assets and evaluated the economics of securitisation. Since then, the market has resumed, and we have seen a structural shift toward the PTC route, which is more capital intensive for originators vis-?-vis direct assignments,? said Pawan Agrawal, senior director at Crisil Ratings.

In May, RBI had prescribed minimum holding period of loans before banks and NBFCs can securitise them and also a minimum amount of the loan being securitised has to be retained by them.

According to Crisil, the norms forced most financial institutions to take the pass-through-certificate route instead of direct assignment transactions.

In pass-through-certificates, the bank routes the loans to be securitised through an special purpose vehicle which issues a PTC to the investor. In direct assignment, the loan or bunch of loans are directly transferred to the buyer’s account.

The rating agency further said that the asset class for securitisation has widened with gold loans being securitised. Crisil has rated securitisation transactions worth R40,000 crore.

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First published on: 19-10-2012 at 02:23 IST
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