Market Participants In India, issuers have typically been private sector banks, foreign banks and non-banking financial companies (NBFCs) with their underlying assets being mostly retail and corporate loans. The key motivations for Indian banks include: Liquidity: Securitisation is an easy route than raising deposits that are subject to reserve requirements Regulatory issues: Constrains arising out of Provisions, priority sector norms, etc Capital Relief: Major investors are mostly mutual funds (money market/liquid schemes), close-ended debt schemes and banks. Long term investors like insurance companies and provident funds are currently not active due to regulatory constraints. Foreign institutional investors are also missing due to regulatory ambiguity. As per guidelines, mutual funds are required to declare their NAV’s on a daily basis due to which they prefer the structure/asset classes which involve low pre-payment rates. The lack of domestic non-traditional hedge fund style investors to participate in equity and mezzanine tranches has led to originators holding them. Some examples of securitisation in the Indian context are: First securitisation deal in India between Citibank and GIC Mutual Fund in 1991 for Rs 160 mn L&T raised Rs 4,090 mn through the securitisation of future lease rentals to raise capital for its power plant in 1999. India’s first securitisation of personal loan by Citibank in 1999 for Rs 2,841 mn. India’s first mortgage backed securities issue (MBS) of Rs 597 mn by NHB and HDFC in 2001. Securitisation of aircraft receivables by Jet Airways for Rs 16,000 mn in 2001 through offshore SPV. India’s first sales tax deferrals securitisation by Govt of Maharashtra in 2001 for Rs 1,500 mn. India’s first deal in the power sector by Karnataka Electricity Board for receivables worth Rs 1,940 mn and placed them with HUDCO. India’s first Collateralised Debt Obligation (CDO) deal by ICICI bank in 2002 India’s first floating rate securitisation issuance by Citigroup of Rs 2,810 mn in 2003. The fixed rate auto loan receivables of Citibank and Citicorp Finance India included in the securitisation India’s first securitisation of sovereign lease receivables by Indian Railway Finance Corporation (IRFC) of Rs 1,960 mn in 2005. The receivables consist of lease amounts payable by the ministry of railways to IRFC India’s largest securitisation deal by ICICI bank of Rs 19,299 mn in 2007. The underlying asset pool was auto loan receivables.
Posted on: Thu, 24 Oct 2013 15:12:40 +0000
Trending Topics
Recently Viewed Topics
© 2015