Securitization is a structured mechanism utilized & envisaged by Banks, NBFCs & Financial Institutions, as a ring-fenced & bankruptcy remote sale of a financial asset or a pool of such homogenous assets (Asset Pool) in return for immediate cash payments. It is an effective method actively used by Non-Banking Finance Companies (NBFCs), Housing Finance Companies (HFCs) & Microfinance Companies (MFCs), to cash-in on illiquid assets in order to enable finance of future lending activities at an economic cost of funds.
In Securitization, the underlying asset pool is transferred to a Special Purpose Vehicle (SPV) which in turn issues securities known as Pass Through Certificates (PTCs) to the Investors, mostly Banks, in exchange of incoming cash investment. While globally SPVs are set up in different forms, SPVs in India are largely set up as Trust. We act as Trustee to the said SPV. We act as a Securitization Trustee for transactions involving.
1. Asset Backed Securitization (ABS)
2. Mortgage Backed Securitization (MBS)
3. Micro Credit Backed Securitization
As a Securitization Trustee, we assist you in:
- Drafting & Vetting of Legal Documents.
- Compliance with RBI Guidelines and SEBI Guidelines.
- Regular analysis of Servicer reports.
- Ensuring timely and accurate payouts.
- Co-ordination amongst Originators, Arrangers, Legal Counsels, Investors, Servicers, Bankers & Rating Agencies among others.
- Credit enhancement/liquidity facility invocation (in case of shortfall) as per RBI Guidelines.
- Enabling smooth flow of proceeds from Investors to the Originator.
- Quarterly Audit for various trusts along with issuance of TDS certificates to the beneficiaries wherever TDS implications are involved.
- Monitoring the credit enhancement as stipulated by the rating agency.
- Periodic (monthly / quarterly reports) along with future cash flows factoring prepayments to the investor, originator & rating agency.
- Prompt response to Investor queries & clarifications sought.
- Redemption of the PTCs on completion of the payouts
Benefits to Originators & Investors
Our inputs on transaction structure/ Information Memorandum along with detailed financial modelling. Expeditious work flow to achieve time efficient:
- Execution of legal documents
- Trust set-up & due dilligence
- Issuance of PTCs in physical & dematerialized
- Opening & management of Collection & Payout Account
In-house system generated reports for:
- Credit Enhancement
- Collections & Payout Account
- TDS Compliance & Certificates