National Housing Bank (NHB) is now very keen to introduce covered bonds and promote other market solutions for the mortgage lending business. The decision follows the recent report of the working group on introduction of covered bonds. NHB is expecting housing finance companies with strong balance sheets to rise funding through alternative capital market instruments such as covered bonds. Covered bonds with are now being introduced in Asian markets as an alternative mortgage backed securities. It also appears that several hurdles facing mortgage securitization transactions such as the stamp duty, taxation issues etc. may also get cleared and mortgage lenderssoon will opt for these.
Recently housing finance companies have also been permitted to source external commercial borrowings. Since securitization counts in ECB housing finance companies also get to issues ECBs to international investors.
Source : Accommodation Times News Service
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