A Working Group for promoting Residential Mortgage Backed Securities (RMBS) and alternative capital market instruments such as Covered Bonds has recommended that National Housing Bank may consider framing norms for issuance of these bonds by housing finance companies.
Headed by Securities and Exchange Board of India Executive Director Ananta Barua, the group in its draft report has also recommended that RBI may also consider prescribing a similar framework for scheduled banks for issuance of Covered Bonds.
“SEBI may consider laying down framework detailing the disclosure and listing requirement required for issuance of covered bonds which are to be listed in the exchanges either under SEBI (Debt Securities) Regulations, 2008 or specifying separate regulations for covered bonds on the lines of SEBI (Public Offer and Listing of Securitized Debt Instruments) Regulations, 2008,” the report said.
The group has also suggested that RBI may consider giving priority sector status to these bonds. “We recommend that investment in covered bond may be excluded from the exposure limits applicable to the issuer, as they are to be sufficiently backed by a pool of residential mortgage loans,” the report added.
A senior NHB official told The New Indian Express that the final report will be prepared within two months after taking into account public comments. “It will take another two months after November 30 for preparing the final report that will then be placed before the NHB board,” he said.