The budget announcements have several positives for the Indian securitisation market in terms of enhancing and widening the investor base, and in paving the way towards a comprehensive regulatory environment for securitisation. According to Raman Uberoi, director, structured finance ratings, CRISIL, "The Finance Minister's initiatives provide the right building-blocks for the creation of a vibrant and well-regulated securitisation market for India" SCRA to be amended: Trading of securitised debt to receive a boost
The recognition of pass through certificates (PTCs) as securities under the Securities Contracts Regulation Act (SCRA) is a crucial first step towards listing and trading of securitised debt, given that stock exchanges typically list only securities. The listing of securitised debt is expected to facilitate trading in such instruments, boosting secondary market liquidity. Recognition as securities to enhance investor acceptance of securitised instruments
The exact legal character of securitised instruments has been an area of discomfort for investors, specifically from an accounting and regulatory perspective. Recognition as securities will provide securitised instruments with much-needed acceptance, besides bringing them into the mainstream of financial instruments used by the market. Expert committee to provide a comprehensive framework for securitisation
Globally, securitisation markets have grown on the back of robust legal, tax and regulatory frameworks. The Indian markets have not, so far, had the benefit of such legislation, and therefore the empowered expert committee proposed by the FM will be a vital initiative in developing a comprehensive framework for securitisation transactions.
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