Page 37 - BFSI CHRONICLE 3092022.indd

BFSI Chronicle, 11 Edition September 2022
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In Asset securitisation, there will be pooling and re-
packing of assets with an income stream, in the form
of marketable securities which can be acquired by
the investors.

These securities are secured by the assets them-
selves or from the income derived by the assets i.e.,
the Underlying asset generally backs the loan or se-
curity.

In the case of industrial loans, the instruments are
termed as ‘Collateralized Loan Obligations’ (CLO).

Process of Securitisation: to a new entity which is referred to as SPV (Special
Securitisation is a process where the Loans, Purpose Vehicle which is either a company or a
Receivables and other Financial Assets are pooled trust. However, as per SARFAESI Act, the Assets are
together with their Cash Flows or Economic Values transferred to an Independent Asset Reconstruction
which are redirected to support payments on related Company. Hence the formation of SPV as a Trust is
securities. not envisaged in the Act.

The Originator (Original Lender) transfers the The process of securitisation begins when the
assets (loans) of a particular Portfolio to SPV Originator segregates the Loans / Lease / Receivables
(Special Purpose Vehicle). The SPV breaks these into a Pool which are relatively Homogenous in
assets into Convenient Amounts and raises capital types of Credit, Maturity and Interest Rate Risk.
from Investors by selling the instruments which These pooled assets are then transferred to a
represent these underlying assets. These Debt Special Purpose Vehicle (SPV) (In the present Act,
Instruments which carry a specific credit rating, are an Independent Asset Reconstruction Company).

issued by the SPV are listed on Stock Exchange and This SPV issues Asset-Backed Securities in the form
thus provide Liquidity. of Debt, Certificates of beneficial ownership and

other Instruments which are rated by Credit Rating
The originator utilises Securitisation to fi nance and Agencies.
enhance his Business Activities and these assets
which are securitised are removed from its Balance Presently, it is expected that these Securities will be
Sheet. offered only to QBs (Qualifi ed Buyers) only and not
for the participation of the public.
Transfer to SPV: The Financial Assets are transferred

The SPV Acts as an Intermediary and procures the
fi nancial Assets from Transferors and Issues Securi-
ties to the Investors.

Funds received from Investors are paid to the Trans-
feror. The Investors are serviced and repaid out of the
income from the underlying assets which are realised
over some time.

The Institute Of Cost Accountants Of India

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