SECURITISATION OF ASSETS
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What is securitisation of assets?
Securitisation is the process of pooling illiquid financial assets (such as loans or receivables) and converting them into marketable securities that can be sold to investors.
What is the primary regulatory framework governing securitisation in India post-2021?
RBI Master Direction on Securitisation of Standard Assets, 2021
What is a Special Purpose Vehicle (SPV) in the context of securitisation?
An SPV is a legally separate entity created solely to purchase the pool of assets from the originator, issue securities backed by those assets, and insulate investors from the originator's credit risk.
What is the meaning of 'pool' in the context of securitisation?
A group of homogeneous loans bundled together for securitisation
What does the term 'originator' mean in a securitisation transaction?
The originator is the entity (usually a bank or NBFC) that originally created the underlying loans or receivables and transfers them to the SPV to raise funds.
Who is the 'investor' in a securitisation transaction?
Entity that buys the securities issued by the SPV
What is a Pass-Through Certificate (PTC) in securitisation?
A PTC is a security issued by the SPV that gives the holder a proportional share of the principal and interest cash flows generated by the underlying pool of assets.
What is the typical maturity profile of assets eligible for securitisation under RBI guidelines?
Assets with residual maturity of at least six months
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