IDBI to enter securitisation market

The Industrial Development Bank of India will be entering the securitisation market with an initial corpus of Rs.2,000 crore. The institution plans to do this as soon as the Reserve Bank of India issues guidelines in this regard. The main areas where IDBI is currently checking out are stamp duty, tax implications, and the legal documentation required for venturing into securitisation.

Of all the products and services that  IDBI is expected  to  launch  in  the  near  future, securitisation is high on the priority list. This will help IDBI in not only diversifying its portfolio but in also reducing its focus and dependence on project finance. It has recently decided to concentrate on short term financing.

Sources in top financial institutions state that the market size for securitisation is huge. On conservative estimates, the market size is around Rs.1,500 - 2,000 crore currently. This market will expand as more and more infrastructure projects come up. It could be anything like a Rs.10,000-crore market in the next few years.

The IDBI plans to securitise its loans in the power, oil exploration, mining, and real estate sectors. These are the sectors that have huge investment potential as the economy grows.

The Reserve Bank of India has set up a group of representatives from ICICI and SBI Capital Markets to draft guidelines on securitisation. The central bank has also discussed the tax and legal matters with the Central Board of Direct Taxes and the Securities and Exchange Board of India.