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India's housing finance sector is poised for a significant transformation as the National Housing Bank (NHB) anticipates Residential Mortgage-Backed Securities (RMBS) firms to raise between INR 10,000 crore and INR 12,000 crore in the upcoming fiscal year. This development follows the country's inaugural listing of RMBS on the National Stock Exchange, a move facilitated by the NHB-promoted RMBS Development Company Limited (RDCL). The successful issuance by LIC Housing Finance, amounting to INR 1,000 crore with a 20-year maturity and a 7.26% monthly coupon, has set a precedent for other housing finance companies.
The National Housing Bank (NHB) has projected that Residential Mortgage-Backed Securities (RMBS) firms will mobilize over INR 10,000 crore in the forthcoming fiscal year. This optimistic outlook follows the country's first-ever listing of RMBS on the National Stock Exchange, a significant step facilitated by the NHB-promoted RMBS Development Company Limited (RDCL). Advertisement
Earlier this week, LIC Housing Finance successfully raised INR 1,000 crore through 20-year securities, offering a 7.26% monthly coupon. These securities, backed by a pool of residential loans, were fully subscribed and received AAA (SO) ratings from CRISIL and CARE. The issuance was structured through a special purpose vehicle named India Residential Mortgage Trust 2025 01.
The NHB's Managing Director and Chief Executive, Sanjay Shukla, indicated that up to 10 similar transactions are expected in the fiscal year, with the next tranche of INR 1,000 crore anticipated within a month. This initiative aims to provide housing finance companies with alternative funding avenues by securitizing future receivables, thereby attracting long-term investors such as pension funds and insurance companies.
The establishment of RDCL, incorporated in March 2024, marks a strategic effort by the NHB to bolster the RMBS market in India. With an initial paid-up equity capital of INR 500 crore, RDCL's shareholders include prominent financial institutions like LIC, HDFC Bank, ICICI Bank, Bajaj Finance, and Grihum Housing Finance. The company's objectives encompass investing in RMBS, facilitating their issuance and trade, providing credit enhancements, and offering liquidity support in the secondary market.
In addition to promoting RMBS, the NHB plans to raise up to INR 60,000 crore through bonds in FY26, an increase from INR 48,000 crore in FY25. This move underscores the NHB's commitment to diversifying funding sources and strengthening the housing finance ecosystem in India.
By introducing innovative financial instruments and fostering collaborations among leading financial institutions, the NHB aims to enhance liquidity, diversify funding sources, and attract long-term investors. These initiatives are expected to not only meet the rising demand for housing loans but also contribute to the overall economic growth by making housing finance more accessible and sustainable.
Source: PTI
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