IIFCL plans subsidiary for issuance of asset backed securities
India Infrastructure Finance Company Ltd (IIFCL) is planning to set up a subsidiary to issue asset-backed securities (ABS) or covered bonds, as it aims to securitise its assets and conserve capital for further business growth. «We are almost reaching the threshold of asset size and loan book that we should have, and we may not really look at the quantum jump in asset size or loan book size. We may have a separate vertical to securitise our own assets,» IIFCL MD PR Jaishankar told PTI.
«We will try to grow our assets and generate more assets with the help of the existing assets instead of taking more liabilities...the idea is that assets should beget assets incrementally. That will save the capital that will help our cost of funds go down, our profitability going up, and that will help improve our viability and quality of assets.»
The idea is to hive off part of our assets, he said, adding, «We will maintain a threshold, and we will focus on increasing the sanctions and disbursements more as compared to growing the asset size or loan book size».
Sharing further details, Jaishankar said the company can look at creating a separate vertical to issue ABS, which could be pass-through or pay-through securities.
«We could have covered bonds. Covered bonds are with recourse paper. ABS is without recourse. So, we can have two structures. So, these things will need little detailing. We can have another subsidiary for that,» he said.
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