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RBI releases the Report of the Committee on the Development of Housing Finance Securitisation Market- (Reserve Bank of India) (09 Sep 2019)

MANU/RPRL/0165/2019

Banking

The Reserve Bank of India had constituted a Committee on the Development of Housing Finance Securitisation Market, on May 29, 2019, with Dr. Harsh Vardhan, Senior Advisor, Bain & Co. as the Chairperson. The Committee was set up in recognition of the role of well-functioning securitisation markets for better management of credit and liquidity risks in the balance-sheets of banks as well as non-bank mortgage originators. The Terms of Reference of the Committee were to review the existing state of mortgage securitisation market in India and make recommendations to address various issues relating to originators/investors as well as market microstructure.

The Committee has since submitted its report to the Governor. The key recommendations of the Committee, guided by the broad perspective of enhancing efficiency and transparency of securitisation transactions, are setting up of a government sponsored intermediary, through the National Housing Bank, to enable market making and standard setting; developing standards for loan origination, loan servicing, loan documentation, and loans to be eligible for securitisation, including standardised formats for data collection and aggregation.

Separation of regulatory guidelines for direct assignment transactions and transactions involving pass through certificates as well as for mortgage backed securities (MBS) and asset backed securities (ABS). Regulatory norms for minimum holding period (MHP) and minimum retention requirement (MRR) for MBS are relaxed. Amendments and/or clarifications for registration and stamp duty requirements and tax guidelines to reduce the transaction costs for securitisation as also to encourage investments in pass-through-securities.

Tags : REPORT   RELEASE   HOUSING FINANCE   SECURITISATION MARKET  

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