HDFC Bank and ICICI Bank, two of India’s largest lenders, have jointly established a company called RMBS Development Company Limited to promote the residential mortgage-backed securities (RMBS) market.
Each bank has acquired a 7% stake in the newly formed company. The objective of RMBS Development Company is to facilitate investment, issuance, and trade of RMBS, provide credit enhancement for RMBS transactions, and offer liquidity support in the secondary market for RMBS transactions.
The company is expected to be operational by the end of March. Other banks and financial institutions will also be shareholders in RMBS Development Company, although their names have not been disclosed.
HDFC Bank and ICICI Bank have invested Rs 35 crore each in the company. RMBS are securities backed by aggregated home loan portfolios, and they play a significant role in funding residential mortgage loans in India. The establishment of RMBS Development Company aims to further develop and promote the RMBS market in the country.
