Securitization

legal transfer of beneficial interest from originator to SPV — assets leave originator's balance sheet (off-balance-sheet treatment).

the SPV is a distinct legal entity so that, even if the originator goes bust, investors' cash-flows are insulated.

Converts illiquid retail loans into immediate cash — restores short-term liquidity, eases LCR pressure

Credit, prepayment & interest-rate risk on the pool moves from bank investors (subject to MRR)

Risk-Weighted Assets (RWAs) drop CET-1 / CRAR ratio improves fresh head-room for new lending

New investor class (mutual funds, insurance cos, FPIs, pension funds) is tapped — deposits no longer the only funding mast

Party: Originator; Role: Bank / NBFC / HFC that originally underwrote the loan pool and transfers it to the SPV. Indian PSBs / private banks / HDFC Ltd. / Bajaj Finance are the dominant originators.

Party: Obligor / Borrower; Role: The retail / corporate borrower under the underlying loan — continues to pay EMIs, but the cash now legally belongs to the SPV.