Securitisation is a process by which a loan portfolio is transferred by a lender (Bank / NBFC) to a Special Purpose Vehicle (SPV), which is mainly set up as a trust. RBI guidelines on securitisation were issued in 2006.The Trust raises monies from the proposed investors (‘PTC holders’) and remits the same to the lender towards purchase consideration for the loans. The Trust converts the pool of loans into securitised debt and issues pass through certificates to the PTC holders, which would be serviced out of the cash flows from the obligers towards repayment of the loans. Post transfer of loan, the original lender acts as a minimum investor and servicer, and co-ordinates interest and principal payment. The main objective of the securitisation process is to improve capital adequacy ratio of the original lender (mainly Banks / NBFCs).
Key role in the securitisation process, which includes the following:
- Holding receivables along with underlying assets in trust for and on behalf of the beneficiaries (investors)
- Vetting all legal documents prepared to ensure “true sale” nature of the transactions including adherence to securitisation guidelines and ensuring smooth execution
- Coordinating with depository and R&T Agents for credit corporate action, creation of ISIN and execution of necessary documents
- Ensuring funding of designated accounts in time in accordance with the provisions of the information memorandum
- Administering payouts along with monthly reporting
- Addressing investor grievances
- On maturity, necessary corporate action and payout to investors
Capital requirements of corporates are dependent on their business model.
Customised services include:
- Efficient security structuring that optimizes cost of funds and taxation
- Legal and compliance implication to business models
- Customised solutions that best-fit business strategy
- Liaising with lenders, other stake holders
- Acting as a third-party agent for various asset classes
