Budget 2013: Securitisation to pick up in FY 2013-14

KOLKATA: Securitisation, the bundling of financial assets of banks, NBFCs and financial institutions into transferable securities, is likely to rise multifold in coming financial year 2013-14 from the existing levels of Rs 20,000 crore per year.

Consultant Vinod Kothari claims that FM's proposal to introduce tax on income distributed by special purpose vehicles, formed to acquire receivables of banks and financial institutions for the purpose of securitisation, will boost the country's debt capital market.

"No tax will be charged on the income of the special purpose vehicles. Tax will be charged on the income distributed by such vehicles as is being done by the country's mutual funds," Kothari added.

Besides being of interest to institutional investors, the tax provision will also encourage high networth individuals to invest in these transactions, he pointed out.