NEW DELHI: The National Housing Bank (NHB) will soon introduce guidelines for non-banking housing finance firms in order to incite funding for housing sector and create an asset-backed securitisation thus expanding the securitisation domain further, as expressed by RV Verma, chairman, NHB at an ASSOCHAM event held here recently.
While addressing a national conference on 'Securitisation: The Emerging Funding Vehicle' organised by ASSOCHAM, Verma said, “Investments in the housing sector account for a meagre seven per cent of the country’s gross domestic product (GDP), which is woefully low and inadequate more so as the sector is second largest employer after agriculture. We have to find ways to bring more liquidity into the capital deficient housing sector through market oriented measures and all this is satisfied by securitisation. Introduction of Basel III would bring in severe liquidity crunch and the banking sector would require huge amounts of capital inclusion and at the same time growth will continue to be more predominant, securitisation is thus a very imminent mechanism on both these fronts.”
The securitisation would help in capital conservation, capital relief and optimum utilisation of capital through off-balance sheet transactions. The process of securitisation is driven by growth of primary lending market along with investors' desire for the investment papers, he added further.