27-09-2013, 03:30 PM
A brief overview of the practices in the Securitization market in India
INTRODUCTION
In India, the securitization market was fairly un-regulated and open to all, before the RBI
regulations of 2006. The RBI regulations of 2006 that came into the market, came in at the
right time to curb the rampant misuse of securitization with substantial first loss support
provided to most transaction without any concern about the regulatory capital. What did the
RBI guideline state? As per the guide lines laid down, the players, that is banks and financial
institutions, in the securitization market would have to transfer the receivables to a Special
Purpose Vehicle (SPV). The loan pool, under the RBI regulations, would now have to qualify
certain strict requirements. Based on this qualification the same player would have to issue a
Pass-Through Certificate (PTC) to the investors on the mortgage backed or asset backed
securities.