Simple, Transparent and Comparable (STC) securitisation: Discrepancy in risk weights needing urgent remedy
Our resources on Securitisation:
Our resources on Securitisation:
Abhirup Ghosh | abhirup@vinodkothari.com
The Indian securitisation market has been without banks as originators for nearly 17 years, until HDFC Bank[1] launched a landmark transaction that may signal their potential return. Prior to the Global Financial Crisis, which raised significant questions about the viability of securitization as a financial product, banks like ICICI Bank were actively involved in the market, with ICICI’s last reported transaction occurring in 2007[2].
It is notable that erstwhile HDFC Limited, prior to its merger into the Bank, was the largest single originator of home loan securitisations; however, the present transaction is not home loans.
After the GFC, banks shifted from being originators to becoming investors in securitised assets. To meet the priority sector lending targets, banks started investing heavily in the securitisation market, be it in pass-through certificates or through acquisition of loan pools. This was a stark contrast to the situation elsewhere in the world, where the issuances are primarily made by banks.
Read more →For registration click here: https://forms.gle/bq18tHgQb618jAcb9
– Vinod Kothari and Payal Agarwal | corplaw@vinodkothari.com
A recent UNCTAD Report[1] highlights the financing gap in sustainable development – citing the need for around $4 trillion additional investment annually for developing countries. India is no exception, in fact, various studies[2] suggest the high sustainable finance gap in the country. As the need for sustainable finance continues to grow, so does the regulator’s vigilance towards providing a definite regulatory framework around the same. In this context, SEBI has released a Consultation Paper on expanding the scope of Sustainable Finance framework in the Indian securities market[3].
The Consultation Paper proposes to expand the current regulatory framework around green debt securities[4], by including other forms of sustainable or thematic bonds[5]; to be covered by a broader expression “ESG Debt Securities”. The Paper also proposes to introduce a framework for Sustainable Securitised Debt Instruments (SDIs). In this write-up, we briefly discuss the concept of green and sustainable securitisation, and give our recommendations for the suggested framework for Green and Sustainable Securitisation in India.
Team Finserv | finserv@vinodkothari.com
Access our Publication launched during the 12th Securitisation Summit here.
Summit home page can be viewed here: https://vinodkothari.com/secsummit/
Team Finserv | finserv@vinodkothari.com
Three rating agencies reported different numbers, but barring the exception of one, the other two hold that the volumes in FY 24 have been lower than the last peak, FY 20. FY 20 was exceptional – it was the year post ILFS, where all balance sheet lenders and investors to NBFCs rushed to off balance sheet transactions, as bankruptcy remoteness became the key objective. The next year was an exception again – Covid wave. However, FY24 was a year of brisk economic lending, and retail credit expansion. There were, therefore, strong reasons that the watermark reached in FY 20 will be crossed. However, it just remained slightly off that, or, if the numbers given by Care Ratings are to be trusted, marginally crossed the mark.
One obvious reason is the merger of HDFC with HDFC Bank. The two contributed major chunks to Direct assignment volumes. Estimated volume lost due to the merger is around INR 40000 crores[1]. However, the other instrument that has dug a shovel in securitsation/ DA volumes is the rise in co-lending.
Read more →For more information regarding the 12th Securitisation Summit –