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Securitasation In India : The story so far and the way forward


Dun and Bradstreet India (D&B India) has reinforced its commitment towards serving Indian financial market through the launch of its publication ‘Securitisation in India: The story so far and the way forward,’ brought to you in strategic association with Asset Reconstruction Company (India) Ltd (Arcil).

The Indian banking industry is witnessing a major transition on the back of a booming economy led by continuous economic reforms and policies. Moreover transition has benefited Indian banking industry with greater autonomy to tap growth opportunities. This has resulted in improvement in efficiency and development of the entire financial system of the country.

During fiscal 2007, aggregate advances of scheduled commercial banks reached Rs 19,812 bn, up from Rs 8,626 bn in 2004, recording a CAGR of 32%. Further, in view of phenomenal growth in advances, it is observed that the sector is also affected by the non-performing assets. It is imperative for the banks and financial institutions to manage, and recover illiquid assets through asset reconstruction companies. In fact securitisation has emerged as a significant tool to resolve issues associated with NPAs. It serves multiple objectives; primary being cleaning up of the balance sheet and creation of liquidity for banking and financial sector.

Notably, ARCs help to increase the lending capabilities of the financial sector apart from enabling players to focus on their core areas of operations by releasing human resource from monitoring and management of NPAs.

The process entails specialisation and has been achieving wide spread acceptance as the most innovative form of asset financing. Furthermore, it provides capital relief, improves market allocation efficiency, expands opportunities for risk sharing and risk pooling, increases liquidity, improves the financial ratios of banks and financial institutions, creates a myriad of cash flows for the investors and facilitates assetliability management.

Securitisation in India: The story so far and the way forward preserve the D&B commitment of providing information and knowledge which facilitate informed business decisions. D&B India has drawn on its time-tested expertise in the information business to the benefit of banks and financial institutions, as this publication amply reflects.

Finally, I would like to thank Arcil for their whole-hearted support extended to this exercise. I am sure you will find this issue of ‘Securitisation in India: The story so far and the way forward’ useful and informative. I look forward to your comments and suggestions

Dr Manoj Vaish
President & CEO - India
Dun & Bradstreet