Critical Success Factors in Asset Securitisation in Indian Banks

DOI

10.2991/978-94-6463-162-3_20How to use a DOI?

Keywords

Asset Securitisation; Bank; Systematic Risks; Direct Assignment

Abstract

Asset securitization is the structured business process whereby Banks’ loan assets and other receivables are packaged and sold in the form of ‘as-set-backed securities’ (ABS), thereby loan originators transfer some of their loan-risks to third parties. Asset securitization considers a pool of performing/non-performing retail loan assets and through financial engineering models, transforms them to tradable security by involving a Special Purpose Vehicle (SPV) that issues Negotiable Instruments (like Bonds/Promissory Notes/CPs) called Pass Through Certificates (PTCs) to Investors. In Indian context, most asset securitization deals are done on Direct Assignment (DA) basis through retail loans-asset pool transfer to pool-buyer Bank with no SPV in between and hence no tradable security. This Research study analysed ‘Critical Success Factors (CSFs)’ in Indian model of asset securitisation and in the process also analysed its associated business-processes, systematic-risks, Issues & challenges. This study sourced its primary data from hands-on deal-practitioners and Subject Matter Experts (SMEs) associated with deal-participating entities and through qualitative data analysis technique of Narrative analysis and Applied Conversation analysis, the research-findings are concluded. Towards future prospects and challenges, this study suggests for setting up ‘Centre of Excellence (CoE) for Assets Securitisation’ in each bank, for ‘building product-expertise and evolve appropriate asset-pricing-models for deals and PTC securities. The study also suggests for an ‘Enabling IT systems’ that support automated deal-processes, risk-monitoring and compliance tracking’. These two aspects would facilitate for better deal-transparency and for making informed decisions by deal stakeholders.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Gopalan Ramachandran
AU  - Srinivas Gumparthi
AU  - Tariq Aziz
PY  - 2023
DA  - 2023/05/10
TI  - Critical Success Factors in Asset Securitisation in Indian Banks
BT  - Proceedings of the International Conference on Emerging Trends in Business & Management (ICETBM 2023)
PB  - Atlantis Press
SP  - 221
EP  - 231
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-162-3_20
DO  - 10.2991/978-94-6463-162-3_20
ID  - Ramachandran2023
ER  -