Dr.B. JOHNSON, Reader, F.M.N.COLLEGE, KOLLAM
What is securitization
A mechanism of pooling of illiquid

assets for converting them into
tradable securities. Illiquid
...
ASSETS FOR SECURITIZATION
Must have homogeneity with regard to three

risks

Credit

Maturity
Interest rate
Residential mortgages,
Commercial and multi -family
mortgages, Home loans,
Automobile loans, Student
loans, Credit card
re...
PIONEERS OF SECURITIZATION IN
THE WORLD
USA, UK, FRANCE, AUSTRALIA, BRAZIL, CANADA,

HONGKONG, NETHERLANDS, JAPAN, GERMAN...
% SHARE OF ASSETS SECURITIZED
IN THE US IN2004
SECURITIZATION PROCESS
Credit rating of the receivables
Originator sell the assets to the

SPV
SPV gives money to the
o...
OPERATORS OF SECURITIZATION
THE ORIGINATOR/SELLER/SERVICER
SPV-SPECIAL PURPOSE VEHICLE/ISSUER/TRUST
INVESTORS
CREDIT R...
TYPES OF SECURI……IN INDIA
ASSET BACKED SECURITIES(ABS)
MORTGAGE BACKED SECURITIES(MBS)
COLLATERALISED DEBT OBLIGATIONS(CDO...
ISSUES OF SECURITIZATION
Heavy stamp duty
Documentation
Absence of proper taxation and accounting procedure
Lack of approp...
CHALLENGES
RATIONALISE STAMP DUTIES
SIMPLIFY THE DOCUMENTATION PROCESS
FORMULATE ADEQUATE LEGISLATION
IMPART THE AWARE...
01 securitization in india – issues and challenges
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01 securitization in india – issues and challenges

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01 securitization in india – issues and challenges

  1. 1. Dr.B. JOHNSON, Reader, F.M.N.COLLEGE, KOLLAM
  2. 2. What is securitization A mechanism of pooling of illiquid assets for converting them into tradable securities. Illiquid receivables are transformed into liquid assets. It restructures the balance sheet. Securitization serves as a very powerful tool of financial reengineering
  3. 3. ASSETS FOR SECURITIZATION Must have homogeneity with regard to three risks Credit Maturity Interest rate
  4. 4. Residential mortgages, Commercial and multi -family mortgages, Home loans, Automobile loans, Student loans, Credit card receivables,Boat loans, Warehouse loans etc
  5. 5. PIONEERS OF SECURITIZATION IN THE WORLD USA, UK, FRANCE, AUSTRALIA, BRAZIL, CANADA, HONGKONG, NETHERLANDS, JAPAN, GERMANY, MEXICO etc. THE FIRST ASSET SECURITIZED WAS AUTOMOBILE LOANS
  6. 6. % SHARE OF ASSETS SECURITIZED IN THE US IN2004
  7. 7. SECURITIZATION PROCESS Credit rating of the receivables Originator sell the assets to the SPV SPV gives money to the originator and issues tradable securities to fund the purchase of assets , directly to the investors or underwriters
  8. 8. OPERATORS OF SECURITIZATION THE ORIGINATOR/SELLER/SERVICER SPV-SPECIAL PURPOSE VEHICLE/ISSUER/TRUST INVESTORS CREDIT RATING AGENCIES
  9. 9. TYPES OF SECURI……IN INDIA ASSET BACKED SECURITIES(ABS) MORTGAGE BACKED SECURITIES(MBS) COLLATERALISED DEBT OBLIGATIONS(CDO) ASSET BACKED COMMERCIAL PAPER(ABCP)
  10. 10. ISSUES OF SECURITIZATION Heavy stamp duty Documentation Absence of proper taxation and accounting procedure Lack of appropriate legislation
  11. 11. CHALLENGES RATIONALISE STAMP DUTIES SIMPLIFY THE DOCUMENTATION PROCESS FORMULATE ADEQUATE LEGISLATION IMPART THE AWARENESS AMONG THE CORPORATES

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