by Sachin Murdeshwar

New Delhi: The Reserve Bank of India (RBI) has appointed Sanjaya Gupta, Managing Director, PNB Housing, as member of the committee to review the existing state of mortgage securitisation in India. The committee will examine various issues constraining market development and help build the market further.

 

Welcoming the move of the regulator and the government, Sanjaya Gupta, Managing Director, PNB Housing Finance said, “There could not have been better timing to initiate discussions on housing finance securitisation market. Mortgage backed security (MBS) transactions in India would require structural changes such as continuous rating of mortgage pools, audits, etc., which in the western hemisphere is prevalent. It is the need of the hour and will lend velocity to the overall growth of the housing finance sector.”

RBI in its statement said “For a vibrant securitisation market to develop, it is imperative that the market moves to a broader issuance model with suitable structuring of the instruments for diverse investor classes. At the same time, as the international experience shows, it is critical to address the issues of misaligned incentives and agency problems resulting from information asymmetry problems between the originators and investors in the market, which can exacerbate systemic risk. Thus, a careful design of a robust and transparent securitisation framework assumes paramount significance.”

 

Bain & Co.’s senior advisor Dr. Harsh Vardhan has been appointed as the chairperson of the committee. The other members include Chandan Sinha, Addl. Director (Learning & Admin), CAFRAL, Naresh Thakkar, Managing Director & Group CEO, ICRA, Pranjul Bhandari, Chief India Economist, HSBC and Bindu Ananth, Chair & Trustee, Dvara Trust.

 

The committee will submit its report by the end of August 2019.