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Current Affairs

Harsh Vardhan committee on Housing Finance Securitisation

Date: 30 May 2019 Tags: Banking Committees

Reserve Bank of India (RBI) constituted six member committee on Development of Housing Finance Securitisation Market. It is tasked to review existing state of mortgage backed securitisation in India and suggest ways to deepen housing finance securitisation market.

Composition of Committee: It will be headed by Bain & Co Senior Advisor Harsh Vardhan. ther members include Chandan Sinha (CAFRAL Addl. Director), Sanjaya Gupta (PNB Housing Finance MD), Naresh Thakkar (ICRA MD), Pranjul Bhandari (HSBC Chief Economist) and Bindu Ananth (Dvara Trust Chairman).  

Terms of reference of the committee

  • Review regulations relating to mortgage-backed securitisation (MBS) currently in place. Make specific recommendations on suitably aligning the same with international norms.
  • Analyse prevalent structures for MBS transactions, including legal, tax, valuation and accounting-related issues.
  • Identify critical steps required for standardisation of MBS practices such as mortgage documentation standards, conforming mortgages, digital registry and verification by investors.
  • Assess role of various counterparties, including servicers, trustees, and rating agencies in securitisation process and suggest measures required to address key risks such as structural, fiduciary and servicer risks.
  • Recommend specific measures to facilitate secondary market trading in mortgage securitisation instruments, such as broadening the investor base, and strengthening the market infrastructure.
  • Analyse inter-linkages between securitisation and other related financial market segments and instruments and recommend necessary policy interventions to leverage these inter-linkages.


The mortgage securitisation market in India is primarily dominated by direct assignments among limited set of market participants on account of various structural factors impacting both demand and supply sides, as well as certain prudential, legal, tax and accounting issues.

For vibrant securitisation market to develop, it is imperative that market moves to broader issuance model with suitable structuring of the instruments for diverse investor classes.

At the same time, international experience shows that it is critical to address issues of misaligned incentives and agency problems resulting from information asymmetry problems between originators and investors in the market, which can exacerbate systemic risk. Thus there is need for careful design of robust and transparent securitisation framework.