Chapter 08
Chapter 08
a] Source of repayment
b] Structure
c] Nature
Securitisation Vs Factoring
The Securitisation is also differs from Factoring, on following
points :
Securitisation Factoring
Associated with Assets. Associated with Book Debts.
Deals with Loans. Deals with Bills Receivables.
Nature is Medium or Long. Nature is short term.
Collection work is done by Collection work is done by
originator or agency. factor himself.
Part of credit risk is cab be Whole credit risk is on the
absorbed by originator. shoulder of factor.
Modus Operandi
In securitisation following parties are required;
a] The originator
b] A Special Purpose Vehicle (SPV) or trust
c] A merchant or investment banker
d] A credit rating agency
e] A servicing agent-Receiving & Paying agent (RPA)
f] The original borrowers or obligors.
g] The prospective investors i.e. the buyer of securities.
Stages in Securitisation
There are five stages involved in the working of Securitisation
a] New Concept
b] Heavy Stamp Duty
c] Cumbersome Transfer Procedure
d] Difficulty in Assignment of Debt
f] Absence of Standardised loan Documentation
g] Inadequate Credit Rating System
h] Absence of Proper Accounting Systems
i] Absence of Guidelines
Future of Securitisation in India
The future of securitisation in India is still very bright due
to following points,