Indian Mortgage Guarantee Corporation (IMGC) provides guarantee against
borrower credit default
DHFL, India’s second largest housing finance company in the private sector, recenly announced its entering into the country’s first ever Mortgage Guarantee contract with IMGC, Indian Mortgage Guarantee Corporation. This offers DHFL a first loss guarantee on its pool of priority sector housing loans.
In a first-of-its-kind transaction, DHFL has securitized this pool of priority sector housing loans with a Mortgage Guarantee to ICICI Bank Ltd. The pool has been rated AAA (SO) by CARE Ltd. This guarantee has enabled DHFL to reduce the level of credit enhancement that would have otherwise been required for securitization, thereby releasing capital which can be redeployed to earn higher returns.
Currently, for
any securitization transaction, the originator of the pool is required to
provide credit enhancement, including liquidity support in the form of cash
collateral.
Speaking on the transaction, Mr Kapil Wadhawan, Chairman and Managing Director of DHFL said, “It is very heartening for me to state that DHFL has led the Indian mortgage market in availing of the country’s first ever mortgage guarantee. This is yet another pioneering move from DHFL that provides the mortgage market a novel template for a securitization transaction. Further, the Company’s vision of ensuring homes to every Indian, especially the low and middle income group customers across the country’s small towns receives an impetus with a mortgage guarantee that releases the pressure of credit risk to a large extent. Mortgage Guarantee in its current structure will however need to travel a long way before becoming an attractive business proposition, towards fulfilling its objectives in India.”
Dewan Housing Finance Corporation Limited,
Sixth Floor, HDIL Tower,
Anant Kanekar Marg, Bandra (E) Mumbai - 51 (E):
Email: communications@dhfl.com
For
further information, please contact:
Magline Rufina F R
Email:
magline.rufina@dhfl.com
Siddhi Lad
Email:
siddhi.lad@dhfl.com
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