Securitisation of Financial Assets : Status, Problems and Prospects

Contents: Preface. List of abbreviations. 1. Securitisation. 2. Selected organisations and research design. 3. Status of the securitisation. 4. Problems of securitisation. 5. Prospects of securitisation. 6. Empirical examination of securitisation. 7. Conclusions. Appendices. Bibliography. Index. 

"Securitisation is an off-balance sheet financing technique which has developed in USA in mid-nineteen seventies. This concept has been introduced into the financial system in India after 1990. The primary objective of securitisation is to mobilise resources at a comparatively lower cost through a wider investor base by removing loan asset from the balance sheet of a lender. It involves the packaging of designated pools of loans and receivables and sale of these packages to various investors in the form of securities which are collateralized by the underlying assets and their associated income stream. It is the process through which illiquid assets are transformed into more liquid form and distributed to a wide range of investors through the medium of capital market.

Basically, all the assets, which generates cash flows can be securitised. These include mortgage loans, housing loans, car loans, other vehicle loans, credit card receivables, trade receivables, etc. Now, the future receivables or future cash flows like tax receipts, educational receipts, electricity bills, toll tax, etc. are securitised.

The dire need of development of securitisation market for effectively doing the Asset-Liability Management (ALM) and to rein the ever growing monster of NPAs in banks and financial institutions led to the enactment of \'Secularisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002." (jacket)