Sunday, May 2, 2010

Trend of Securitisation in India


Trend in structured Finance (securitisation) in select categories

Category                         2006  2007   2008   2009   2010

Asset backed securities 17850 23420 31320 13580 20970

loan sale-offs                  2100 11900  31820 36440 14580

Total issuances              24960 36930 63730 54470 42590

Per cent growth (%)                    48       73       -15     -22

Figures in Rs crore at end of March Source: Icra estimates

The above data is from ICRA estimates appeared in an article in The Business Standard of April 27, 2010 (  Securitisation is a product in use in Indian markets for at least twenty years but has not been very popular.  May be due to lack of awareness among finance professionals and decision makers in the commercial banks or guidelines from the regulators. The growth trend in 2006-07-08 has become negative in last two years 2008-09-10 presumably attributed to the global meltdown. 

May be the bankers and other players have become extra cautious during the recessionary period.  But, thanks to the conservative or cautious approach of the Indian Banking system, the meltdown has not affected them so severely as compared to their USA counterparts.  More than 100 commercial banks in US have either closed down or bailed out whereas nothing of that sort happened in India.  Indian banking system has been sound and robust.  Deposit and Credit growth has been on the normal trends in India.

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