ROLE OF NATIONAL HOUSING BANK (NHB)

The origin of securitisation can be traced to 1991 when the first deal was structured in India. Since then there have been isolated deals in the areas of auto loans, credit card and other receivables of various organizations. Considering the potential of the Indian market, this growth is modest. The investors in the securities have all been institutional players and almost all the securitised debt pools have been privately placed with single investors who have held them till maturity.In the field of Mortgage backed securitisation, NHB launched the pilot issues of RMBS in August 2000. Since then there have been other issuances of RMBS by Banks and Financial Institutions. NHB has so far launched ten issues of RMBS with total loan size of Rs.862 crore. NHB has been working towards development of systems and building of institutions in order to make the RMBS market sustainable in the long run. In this process, NHB’s efforts have been directed at equipping the market participants with adequate understanding of the RMBS products and generating sufficient awareness about the issues, risks and benefits associated with the RMBS instruments as also gradually widening the investor base, which is essential for a successful secondary mortgage market in the country.

Considering that development of secondary mortgage market in India will largely depend on a sustainable securitisation transaction mechanism, it has been NHB’s efforts to address issues relating to mortgage backed securitisation and evolve suitable securitisation transaction structures within the existing legal and regulatory framework and at the same time, make the transactions simple and viable so that the product finds acceptability in the market.