India’s first mortgage backed Pass Through Certificates listed on the National Stock Exchange

The Ministry of Finance in India announced the listing of the country's first Mortgage-backed Pass Through Certificates (PTCs) on the National Stock Exchange. The PTCs, issued under the RMBS Development Company Limited, were backed by a pool of housing loans originated from LIC Housing Finance Limited, and their total face value amounts to Rs. 1,000 crores. These certificates were fully subscribed and feature an electronic discovery of coupon rate on the National Stock Exchange's Electronic Book Provider platform. The final maturity of these PTCs is almost twenty years with a fixed annual coupon rate of 7.26%. The instruments have been rated AAASO by CRISIL and CARE Ratings, enabling they to be traded in the secondary market after being issued in demat form. Speaking on this significant event, Secretary of the Department of Financial Services, M. Nagaraju, underscored the strategic importance of the housing sector and housing finance for India's economic growth. Notably, he highlighted the critical role that securitization plays in integrating housing finance markets with the larger debt market context, suggesting RMBS could drive growth in the housing finance sector due to its capacity to address major housing needs across a vast population, thereby contributing to overall economic development. In summary, this policy text outlines a pivotal move by India's Ministry of Finance towards utilizing financial innovations—specifically mortgage-backed securities—to enhance and stabilize housing finance markets. This action reflects efforts to promote broader economic activity and development through strategic banking mechanisms.

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