PSU Banks Must Consider Securitising Loans

.....The good part is there is an innovative solution available: securitisation -or sale -of a portfolio of performing loans. Public sector banks are not used to this unlike private peers such as ICICI Bank, Axis Bank and Kotak Bank, and some non-banks. The reasons are cultural and trust-related, but the time to cross these barriers is nigh. When a loan is securitised, it goes off the balance sheet, so the amount of capital to be set aside is proportionately lower and is primarily restricted to the assets remaining on the balance sheet. What's more, enabling mechanisms such as securitisation guidelines and infrastructure debt fund regulations are already in place.................

Read - ET