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Securitisation - The Indian Perspective: Tuesday 8 June 2021
Securitisation - The Indian Perspective: Tuesday 8 June 2021
Perspective
Presented By :
Amit Kumar -334
Gowrishankar-NUMBA
Jagdish Agarwal-371
Pritish Chaudhary-406
Priyaranjan Singh-408
Puneet Singh Bhatia-409
Sujeet Kumar-461
Tirthankar Ghosh– 467
Hindsight
Conclusion
2
Introduction
Securitisation is the process of pooling and repackaging of homogenous
illiquid financial assets into marketable securities that can be sold to
investors.
Through it illiquid assets are converted into trade able security with a
secondary market.
It is measure of replenishing the funds by recourse to the secondary
market.
Securitisation is a process by which the originators of assets like loans
which are illiquid are able to transfer such assets to a special purpose
vehicle ('SPV') which, in turn, issues tradable liquid securities to investors.
In a typical securitisation transaction, the company seeking to raise funds
transfers certain of its assets to an SPV that is organized in such a way that
minimizes the likelihood of bankruptcy.
Hindsight
1991 saw a large number of reforms in the financial side
The government ensued upon a policy for larger economic reforms allowing foreign
direct and indirect investment .
This needed for the legal framework on securitization
The enactment of the SARFAESI Act, 2002
The Act encompasses the areas of:
securitization of financial assets;
reconstruction of financial assets;
recognition to any security interest created for due repayment of a loan as security
interest under the Securitization Act, irrespective of its form;
banks and financial institutions have the power to enforce the security without
intervention of the courts;
setting up the Central Registry for registration of the transaction of securitization,
reconstruction and creation of security interests.
Hindsight
Securitisation of financial assets became a financial tool for the lenders to securitise their
future cash flows thus releasing their funds blocked in them.
The secured assets become a market commodity having financial returns on their realisation.
This aspect brought in the much-needed expertise in adept handling in realisation of the
secured assets.
The Act has made an attempt to streamline the legal impediments of normal civil law
procedures to foreclose the mortgaged assets by empowering the enforcement of the secured
assets by flexible mechanism provided in the Act. The Act made provision for :
Incorporation of Special Purpose Vehicles
Securitisation of Financial Assets.
Establishment of Central Registry for regulating and registering securitisation transactions
Enforcing security interest i.e. taking over the assets given as security for the loan..
Funding of securitisation.
Asset Reconstruction.
Offences & Penalties.
Securitization issuance in emerging markets
Country Issuance in $bn Country Issuance in $bn Country Issuance in $bn
Asia Latin America EEMEA
Taiwan 1.9 Brazil 4.8 Turkey 4.5
South Korea 26 Mexico 4.3 South Africa 2.2
India 6.67 Argentina 1.5 Egypt 1.7
Singapore 1.2 Chile 0.9 Russia 0
Malaysia 0.4 Peru 0.7 Others 0.2
Indonesia 0.6 Columbia 0.5
Japan 81 Others 1.3
Asia 117.77 Latin America 14 EEMEA 8.6