RBI forms panels to regulate corporate loans |
India`s central bank, the Reserve Bank of India has appointed two separate six¬ member panels to create a more transparent framework for the sale of bad corporate assets and securitisation of housing loans in a bid to make these processes more open and structural. The two panels will review the existing market operations and come up with recommendations aligning the markets with global best practices. The regulators deemed the existing state of both markets dominated only by certain players due to lack of clarity on operating mechanisms. According to the RBI, the current market lacks any formalised mechanism and is largely restricted to sale of bad debts by banks to asset restructuring companies and a well¬ developed secondary market for debt would also aid in transparent price discovery of the inherent riskiness of the debt being traded. The RBI said that the mortgage securitisation market in India is primarily dominated by direct assignments among a limited set of market participants on account of various structural factors impacting both the demand and the supply side.
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