Revised norms for securitisation likely to boost volume of loans

The securitisation process involves the conversion of an assets mostly loans, into marketable securities, which are sold to investors to raise cash

The revised norms for securitisation are expected to boost the volumes of loans that lenders sell to investors as the Reserve Bank of India has reduced minimum holding period from 12 months to six months.

The securitisation process involves the conversion of an asset, mostly loans, into marketable securities, which are sold to investors to raise cash. Lenders use one of the two methods -- direct assignment and pass through certificate – to offload loans.

Banking regulator also reduced the minimum amount of loan to be retained on book from 10 per cent to five per cent for sale and