RMBS Development Company to Launch Next Month

Mumbai, Feb 13 (PTI) National Housing Bank-promoted RMBS Development Company is almost ready for operations with most of its promoter shareholders coming on board, pooling in the Rs 500 crore initial equity capital for the company that will function as a pooled entity for mortgages.

RMBS or residential mortgage-backed securities which are debt-based assets backed by the interest paid on residential loans and its primary aim is to develop the RBM market by investing in them and facilitating and trading in RBMs, which represent aggregated home loan portfolios support by payments of principal and interest by individual borrowers. Lenders normally pool these loans and sell them as pass-through securities which release their lendable capital.

An NHB source told PTI that the proposed RMBS Development Company is most likely will be launched next month as all the equity investors –10 financial institutions--are in place now.

The company is floated by NHB with a majority equity of 39 per cent, followed by LIC with 10 per cent and the rest of 51 per cent. The first ones to join the company were HDFC Bank and ICICI Bank which will own 7 per cent, followed by Bajaj Finance which will also own 7 per cent.

Earlier this week, Grihum Housing Finance which was earlier Poonawalla Housing, joined with a 5 per cent holding.

According to the above-cited source, other equity holders are Tata Housing, Hero Housing, Shriram Housing, IIFL Housing and Aditya Birla Housing.

Initial proposed paid-up equity capital is Rs 500 crore, the sources added.

Earlier this month, both HDFC Bank and ICICI Bank had informed stock exchanges that they had packed up 7 per cent each for Rs 35 crore each.

Grihum in a statement said it will also be amongst the initial shareholders and its board has approved up to Rs 35 crore investment in the equity share capital of RDCL.

This initiative will catalyze the transformation of the housing finance market as its multifaceted objectives include investing in RMBS, facilitating the investment, issuance, and trade of RMBS, extending credit enhancement, including second loss credit enhancement, for RMBS transactions, and providing crucial liquidity support in the secondary market for RMBS transactions.