New RBI norms to curtail securitisation volume: Icra

MUMBAI: The securitisation market is likely to see a drop in the current financial year following the recent Reserve Bank guidelines, according to the rating agency Irca.

As per the agency, bilateral assignment transactions, which constitute a major portion of the securitisation market, will be badly hit due to the RBI guidelines.

"RBI's final guidelines on 'Securitisation and direct assignment transactions' will adversely impact volumes in the current financial year," Icra head for structured finance Kalpesh Gada told reporters here today.

Direct assignment is a bilateral portfolio sale in which an operating entity like a bank or a mutual fund house buys assets directly without floating any special purpose vehicle.

According to the agency, total securitisation market rose 15 per cent to Rs 36,603 crore in FY12, with the volume logging in a higher 32 per cent.

Gada also said bilateral transactions volume would significantly fall after the guidelines.

The recent RBI guidelines impose curbs on providing credit enhancement for direct assignment of loan receivables.

He also said lack of clarity on taxation on special purpose vehicles (SPVs) involved in the securitisation process will also act as a dampener in securitistion deals this fiscal.