On Monday, Mr. M. Nagaraju, Secretary, Department of Financial Services, Ministry of Finance, rang the bell for India’s First Mortgage-Backed Pass-Through Certificates (PTCs) official listing. The listing event happened in the presence of various Heads of Banks, Housing Finance Companies, and other financial institutions.
RMBS Development Company Limited (RDCL)’s role
These PTCs were structured or arranged by the RMBS Development Company Limited (RDCL), a Non-Banking Financial Company regulated by the Reserve Bank of India that was established by the National Housing Bank (NHB) and is supported by various investor classes, including banks and insurance companies. Moreover, the RDCL is also set to structure 7-10 more Residential Mortgage-Backed Securitization (RMBS) transactions, aggregating ₹10,000 crore to ₹12,000 crore by FY26.
Details about PTCs
The PTCs are backed by a pool or group of loans that are given by the LIC Housing Finance Ltd. to its borrowers. The issue consists of 1,00,000 PTCs of Face Value of Rs 1,00,000 each, making the total issue size of Rs 1,000 crores. The PTCs have a final maturity period of twenty years, and the coupon rate is 7.26% per annum. These PTCs are issued in demat form (i.e., in an electronic format) and are also transferable. The PTCs can also be traded in the secondary market, as they are listed on the exchange. The instruments have been rated as “AAA” by the CRISIL and CARE Rating agencies.
This is also the first issue of PTCs in which the coupon rates are discovered in the “Electronic Book Provider (EBP),” a web-based portal for online bidding of private placement of debt securities, which are offered to be listed on the National Stock Exchange.
Mr. Nagaraju’s opinions on the role of housing and the housing finance sector
Talking at the event, Mr. Nagaraju mentioned the importance of the housing and housing finance sector for the growth of the economy. He stated that housing finance has many direct and indirect links with many other industries, including the infrastructure. Outlining the country’s population size, he also urged the need to address housing needs at the earliest to attain overall economic development.
He specified that such securitization of mortgage-backed loans or debts can act as a bridge for the housing finance market and the debt market. Recapping the need for RMBS, he asserted that it could act as a driving force for the rise of the housing finance sector.
