India on way to developing trade in securitised assets
NEW DELHI, India on Friday introduced legislation to Parliament that would develop the market for securitised debt instruments and permit their listing on stock exchanges, which would make it easier for banks to raise funds.
Securitisation involves pooling of financial assets such as home loans, cars and personal loans, credit card dues, corporate debt and export receiveables, with the assets' income streams used to generate interest payments.
"Securitisation allows banks to keep these loans off their balance sheets, thus reducing the need for additional capital, improve liquidity and improve access to alternate sources of funding," Finance Minister Palaniappan Chidambaram said in a statement.
It would also enable banks to convert illiquid assets into marketable securities, he said.
India allows the securitisation of mortgages and bad loans of banks but such securities are not allowed to be traded in stock exchanges.
"The market has not picked up because of the absence of the facility of trading on stock exchanges," Chidambaram said.
:tea:
NEW DELHI, India on Friday introduced legislation to Parliament that would develop the market for securitised debt instruments and permit their listing on stock exchanges, which would make it easier for banks to raise funds.
Securitisation involves pooling of financial assets such as home loans, cars and personal loans, credit card dues, corporate debt and export receiveables, with the assets' income streams used to generate interest payments.
"Securitisation allows banks to keep these loans off their balance sheets, thus reducing the need for additional capital, improve liquidity and improve access to alternate sources of funding," Finance Minister Palaniappan Chidambaram said in a statement.
It would also enable banks to convert illiquid assets into marketable securities, he said.
India allows the securitisation of mortgages and bad loans of banks but such securities are not allowed to be traded in stock exchanges.
"The market has not picked up because of the absence of the facility of trading on stock exchanges," Chidambaram said.
:tea: