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BFSI Chronicle, 11 Edition September2022
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In some cases, limited recourse to the lender may be pro-
vided even if Securitisation is done without recourse i.e., in
cases of original lender is alleged or established for fraud,
forgery, suppression of facts, misstatements etc.

‘Securitisation’: acquisition can be done by the ARC raising funds
‘Securitisation’ is deﬁned in legal terms as the either from Qualiﬁed Buyers or by the issue of

acquisition of a ﬁnancial asset by any Asset Security receipts. [Section 2(1)(z) of SARFAESI Act

Reconstruction Company from any Originator. This as amended w.e.f. 1-9-2016].
Assets that can be Securitised:

All assets which generate Cash Flow can be Secu-
ritised such as

Mortgage Loans.

Housing Loans.
Automobile Loans.

Credit Card Receivables.
Trade Receivables.
Consumer Loans.
Lease Finance etc.

It is not necessary for the asset which is securitised between funding for assets and sources of liabilities
should be non-performing and a healthy normal can be reduced.
ﬁnancial asset can also be securitised. Mortgage Securitisation or Asset

Securitisation:
Long Dated Assets and Short Dated Funding Securitisation is of two types Mortgage Securitisation
Sources: and Asset Securitisation.
Traditionally, banks have short-dated deposits. If
advances of a ﬁnancial institution are disbursed In mortgage securitisation, a pool of mortgage-

on a long-term basis, then they are regarded as backed loans is converted into tradable debt
long-date assets and the credit risk is high for such security and they are considered mortgage-backed
advances. Securitisation is a way to convert the securities, for example in cases of housing loans.
potential credit risks involved with the long-dated
assets into sources of capital. Thus, the mismatch

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