SoCal PDA Chapter's 6th Annual Industry Summit Expo (Exhibitor)
6th Securitisation Summit, 2017 - Vinod...
Transcript of 6th Securitisation Summit, 2017 - Vinod...
6th Securitisation Summit, 2017
12th May, 2017 | World Trade Center, Mumbai
Findings and Key Takeaways
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6th Securitisation Summit, 2017 witnessed a gathering of the market players;
brain storming the prospects, challenges, issues, concerns and way forward
of the securitisation industry in India. The Summit, held on 12th May, 2017 at
World Trade Center, Mumbai, witnessed one of the critical rendezvous of the
stakeholders in the securitisation industry in India.
The Report captures the mood, motion and message of the market.
Genesis and Progress of the Summit
After the removal of the distribution tax, the Indian market posed an impressive
growth. Not only was there a shift in focus from direct assignment to PTCs, but also
several innovations were tried in the Indian market.
This years’ summit is the first one to review the market performance after the
remarkable changes in the taxation laws and also after FPIs were allowed to invest in
securitised debt instruments in India.
Vinod Kothari Consultants Private Limited (VKC), in association with the Indian
Securitisation Foundation (ISF), brought the stakeholders of the industry again under
one roof in the 6th Securitisation Summit, 2017 in Mumbai to discuss the regulatory
framework, taxation and structuring issue concerning the securitisation industry and
exploring various opportunities in order to expand the market.
The Summit witnessed an intellectual gathering and there was flurry of discussion,
exchange of opinions and views expressed. The Summit’s positive response was over-
whelming.
Also for the first time, in order to acknowledge the contributions made by various
stakeholders, Indian Securitisation Awards were introduced. This received a lot of
attention of the market participants in terms of nominations and the winners were
decided by independent and jury and on public voting.
Program
Ms. Vinita Nair, Assistant Vice-President, VKCPL, delivered the welcome
address to the Summit along with modus operandi for the live polling for each
of the sessions. The Summit progressed with overview of the Securitisation
Market, an introduction of Indian Securitisation Foundation, issues being
faced by the Securitisation Industry.
Session 1: Taking stock of market developments
Session 1 dealt with the state of the securitisation
market in India and taking a stock of the market
developments
The session was moderated by Prof. Krishnamurthy
Vaidyanathan
Mr. Kalpesh Gada deliberated on the state of Indian
securitisation market
Mr. Vikas Rungta and Mr. Maneesh Dangi spoke
about the sentiments of the investors in the Indian
securitisation market
Mr. Arvind Sampath focussed on the appetite of
foreign investors to invest in Indian securitisation
market
Mr. Sachin Bhosale focussed on whether there can
be new classes of investors in the market and
whether there will be takers for low rated PTC
tranches.
Mr. Vineet Sukumar talked about the innovative
structures tried and tested in the market during
the past year and the probable innovations that
may be tried in time to come.
Prof. Krishnamurthy Vaidyanathan -
Finance Faculty, Indian School of
Business & Visiting Faculty, University of
Connecticut [Panel Moderator]
Mr. Kalpesh Gada – Consultant –
Structured Finance
Mr. Vikas Rungta - Head- Credit
Research, Reliance Nippon Life Asset
Management Ltd
Mr. Maneesh Dangi - Co-CIO, Birla Sun
Life Asset Management Company
Mr. Arvind Sampath - Head – Treasury,
Fullerton India Credit Company Limited
Mr. Sachin Bhosale - Vice President,
ICICI Securities Primary Dealership
Limited
Mr. Vineet Sukumar - Senior Partner &
CFO, IFMR Capital
Session 2: Traditional and Alternative asset classes
Session 2 dealt with traditional and alternative
asset classes
The session was moderated by Ms. Bekxy
Kuriakose
Mr. Surendra Srivastava deliberated on the
scope of priority sector market with with MFIs
turning into banks
Mr. Rahul Chhaparwal expressed his thoughts on
the market scenario moving towards new non
priority asset classes
Mr. Sanjay Jain focussed on the NBFCs selling to
ARCs
Mr. Gaurav Bhagat talked about the potential
for green securitisation and green bonds in
India
Mr. Venkat Pala discussed spoke about the
market for securitisation of trade receivables in
India
Ms. Bekxy Kuriakose, Head- Fixed
Income, Principal Pnb AMC [Panel
Moderator]
Mr. Surendra Srivastava - CFO, MUDRA
Mr. Rahul Chhaparwal - Vice President –
Structured Finance, Kotak Mahindra
Bank
Mr. Sanjay Jain – President & COO,
ARCIL
Mr. Gaurav Bhagat - Head, Capital
Markets - FIG, South Asia, Standard
Chartered Bank
Mr. Venkat Pala – Vice President, Asset
Management & Wealth Management,
Valuelabs
Special Session : Impact of IFRS on Indian
Securitisation Transactions A detailed presentation on the IFRS and its
impact was witnessed in the special session
where Mr. Praateek Mankad.
Some of the key issues addressed in this session
were:
(a) does the securitisation transaction qualify
for de recognition at all;
(b) if it does, will the consolidation criteria
under IFRS 10 will be applicable; and
(c) assuming consolidation is not applicable,
will the disclosures as provided in IFRS 12
apply?
Mr. Prateek Mankad - Associate Director,
KPMG India
Session 3: Mortgage Lending and
Securitisation Session 3 dealt with Mortgage Lending and
Securitisation
The session was moderated by Mr. Vinod Kothari
Mr. V S Rangan deliberated on Residential
mortgage lending
Mr. Rajesh Mokashi spoke about Commercial
mortgage lending
Mr. Shadab Rizvi and Mr. Prakash Dandwani
focussed on potential for investing in RMBS &
CMBS
Mr. Peeyush Pallav gave a global overview about
covered bonds
Mr. Vibhor Mittal & Mr. Krishnan Sitaraman
discussed about the scope of covered bonds in
India
Mr. Vinod Kothari, Director, Indian
Securitisation Foundation & CEO, Vinod
Kothari Consultants P. Ltd [Panel Moderator]
Mr. V S Rangan - Executive Director, HDFC
Ltd.
Mr. Rajesh Mokashi - MD & CEO, CARE
Ratings
Mr. Shadab Rizvi - Associate Vice President –
Structured and Credit Investments, ICICI
Prudential Asset Management Company
Limited
Mr. Prakash Dandwani - Head-Debt Capital
Market, Aditya Birla Finance Ltd
Mr. Peeyush Pallav – Senior Vice President,
DBS Bank
Mr. Vibhor Mittal – Head, Structured
Finance, ICRA Ltd.
Mr. Krishnan Sitaraman – Senior Director,
CRISIL Limited
Session 4: Creating an Enabling Regulatory
Environment Session 4 dealt with Creating an Enabling
Regulatory Environment
The session was moderated by Mr. Arindam
Banerjee
Mr. Sapan Gupta stressed the need for
recasting the RBI guidelines of 2012
Ms. Bahroze Kamdin spoke about the lingering
tax concern in the market highlighting the GST
issues in assignment of actionable claims
Ms. Richa Agarwal focussed on SEBI’s role as a
key enabler
Mr. Anurag Das and Mr. M R Umarji deliberated
on whether the regulations facilitating enough
to allow trading of SRs issued by ARCs and
whether ARCs can be used for securitization of
performing assets
Mr. Arindam Banerjee,Deloitte Touche
Tohmatsu India Private Limited [Panel
Moderator]
Mr. Sapan Gupta - Partner National
Practice Head, Banking & Finance,
Shardul Amarchand Mangaldas & Co
Ms. Bahroze Kamdin - Partner – Global
Business Tax, Deloitte Haskins & Sells
LLP
Ms. Richa Agarwal – Deputy General
Manager, SEBI
Mr. Anurag Das – Managing Partner, Rain
Tree Capital
Mr. M R Umarji - Former Executive
Director, RBI
Twitter Polls
What is the most significant factor responsible for the significant growth in
securitisation volumes in 2016-17?
(A) Tax issues got cleared
(B) Investors were driven by the usual
motivation of PSL shortfalls
(C) Investors were driven by the motive of
yield enhancement Option C
Option B
Option A
Foreign portfolio investors were permitted to invest in Indian securitisation
market? Do you think there is substantial investment appetite for FPIs in Indian
ABS/MBS paper?
(A) Yes
(B) No
(C) May be Option C
Option B
Option A
Twitter Polls
What is your take on the likely shape of the market in 2017-18?
(A) Direct assignments will fade out; innovative
PTC structures will gain prominence
(B) The market will continue to choose between
direct assignments and PTCs
(C) The appeal of direct assignments will
remain
Option C
Option B
Option A
What is the top factor in 2017-18 that will drive securitisation markets?
(A) NBFCs will continue to be originators and
banks will remain investors
(B) Banks will emerge as originators and asset
managers will be investors
(C) New class of investors such as HNIs, family
offices, etc will emerge Option C
Option B
Option A
Twitter Polls
With MFIs turning into banks, do you think there will be a shortage in the supply side of
PSL portfolios?
(A) Yes
(B) No
(C) May be
Do you think, considering the long tenure of the underlying receivables in case of
renewable energy assets, green securitisation can open up investment opportunities for
institutional investors like pension funds, insurance companies etc.?
(A) Yes
(B) No
(C) May be
Option C
Option B
Option A
Option C
Option B
Option A
Twitter Polls
Considering the increasing pace of trade financing, is there a scope of trade
receivables securitisation in India?
(A) Yes
(B) No
(C) May be
Do you think increased focus on the affordable housing segment will increase the scope
of RMBS transactions in the country?
(A) Yes
(B) No
(C) May be
Option C
Option B
Option A
Option C
Option B
Option A
Twitter Polls What do you think has stopped the issuers from trying covered bonds in India?
(A) Lack of legal and regulatory clarity on the
subject
(B) Lack of interest from the investors
(C) Established market for traditional
securitisation products
(D) All of the above
Do you think we can expect the CMBS market to take off anytime sooner?
(A) Yes
(B) No
(C) May be
Option D
Option C
Option B
Option A
Option C
Option B
Option A
Twitter Polls Do you think the RBI regulations need a recast to accommodate innovative structures?
(A) Yes
(B) No
(C) May be
Do you think trading of SRs issued by ARCs, if started, will be able to gain substantial
attention from the investors?
(A) Yes
(B) No
(C) May be
Option C
Option B
Option A
Option C
Option B
Option A
Twitter Polls Do you think the GST on transfer of secured receivables will affect the market
adversely?
(A) Yes
(B) No
(C) May be
Option C
Option B
Option A
Key Takeaways
State of Indian Securitisation Market
The market crossed the INR 80K crore mark during the last year
Issuance of PTCs grew by 60%
The gap between securitisation and direct assignment got narrowed down
Maximum share of origination was done by NBFCs
Banks continued to remain to be a major investor
Of the total volume of receivables securitised – 60% towards PSL and 40% towards Non PSL
Priority Sector Lending Certificates worth INR 30K crores were issued during the last year
Innovative structures and asset classes
Several innovative structures and asset classes were tried during the year
In terms of innovative structures – Stripping of tenure of principal repayment of PTCs took place, PAR
structures were tried in multiple originator securitisation transactions
In terms of new asset classes – Letter of Credit backed receivables were securitised during the year
LAP can be a new asset class – though it will be complex, but if the pricing is good, there will be
market acceptability
Covered bonds were attempted but the first issue is yet to happen
Classes of investors in the market
Banks continue to be a major investor in the market
MFs are gradually increasing their share in the market and it is expected in the next 5 years, MFs will
be the biggest investor in the Indian securitisation market
FPIs – Major investments yet to come. Stable rupee and settled securitisation market would motivate
FPIs to invest in the Indian securitisation market
Key Takeaways
Trading of SRs
SEBI is making changes in the regulatory regime to facilitate trading of SRs
Trading of SRs will not be possible unless there are sufficient spreads available with the investors
Impact of demonetisation on securitisation
Impact of demonetisation was very clearly visible through the reduction in the volume in the second half
of the year
MFIs faced some issues owing to demonetisation, but they have already been taken care off
Role of MUDRA in securitisation
They have separate schemes for securitisation
Currently their exposure is on senior tranches of PTCs
They will extend their exposure to junior tranches as well during the year
Other asset classes and originators
There have been several multiple originator transactions
CDOs have not been tried during the year, however there can be such structures sooner than later
Securitisation of NPLs should gain momentum
Securitisation of unsecured loans will take some time to take off
Securitisation by non-financial entities has to happen outside the framework and is in nascent stage –
this needs to be developed as this will give capital relief to the originators
RBI regulations
They need a recast to allow the market to try innovations
Revolving structures are allowed under RBI regulations, however, there is lack of clarity
Key Takeaways
Green Securitisation
The definition of green has to come out clearly in the directives of SEBI
Investor diversification is required for the market to grow
There have been several issuances of green bonds in India so far including Green Masala Bonds
Green securitisation has not yet been tried in the country
Trade financing securitisation
There is huge scope in the Indian market
The market is yet to be developed
Institutional investors, Hedge funds and HNIs can be potential investors for this asset class
Mortgage Backed Securities
RMBS continues to be the only mortgage class in the securitisation market
CMBS is yet to take off
In comparison between lease rental discounting and CMBS, the former has an edge over the latter
CMBS and REITs can utilised together to structure financing of commercial properties – where
equity financing can be carried out through REITs and debt financing can be carried out through
CMBS
Taxation issues
Most of the issues pertaining securitisation taxation has been resolved
Clarity is required for taxation of FPI investment in securitisation transactions
GST is likely to cover assignment of receivables
Indian Securitisation Awards 2017
RESULTS
For more information click here
Innovative Deal of the Year India Mortgage Guarantee Corporation Limited
Arranger of the Year (Large Issuance) Kotak Mahindra Bank Limited
Arranger of the Year (Small Issuance) IFMR Capital Finance Private Limited
Trustee of the Year Catalyst Trusteeship Limited
Law Firm of the Year Wadia Ghandy & Co
Organisers
Kolkata
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Phone:033-22811276/ 22813742/7715
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Phone:011-41315340/ 65515340
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403-406, Shreyas Chambers,
175 , D.N. Road, Fort, Mumbai – 400 001
Phone: 022 22614021/ 30447498