India Lists First Mortgage-Backed Pass Through Certificates on NSE

India marked a significant milestone in its financial markets with the listing of the country’s first Mortgage-Backed Pass Through Certificates (PTCs) on the National Stock Exchange (NSE). Structured by RMBS Development Company Ltd. and backed by housing loans from LIC Housing Finance, this innovation is set to deepen the securitization and housing finance market in India.

Why in News?

The Department of Financial Services (DFS) under the Ministry of Finance celebrated the listing of India’s first mortgage-backed PTCs, a landmark event that aligns with the government’s goal to expand the housing finance ecosystem. This securitized debt instrument, fully subscribed at ₹1,000 crores, aims to integrate the debt and housing finance markets, enabling broader financial participation and secondary market liquidity.

Key Details of the PTC Issue

• Issuer: RMBS Development Company Ltd.
• Backed by: Housing loans originated by LIC Housing Finance Ltd
• Issue Size: ₹1,000 crores
• Number of PTCs: 1,00,000 (Face value ₹1,00,000 each)
• Listing Platform: National Stock Exchange (NSE)
• Coupon Rate: 7.26% per annum
• Maturity: ~20 years
• Form: Dematerialized (demat) and transferable
• Ratings: AAA(SO) by CRISIL and CARE Ratings
• Coupon Discovery Platform: Electronic Book Provider (EBP) of NSE
• Tradability: These PTCs can be traded in the secondary market

What is a Pass Through Certificate (PTC)?

• A Pass Through Certificate is a securitized debt instrument.
• Investors receive regular payments (principal + interest) from the underlying pool of loans.
• In this case, the loans are housing loans, making it a residential mortgage-backed security (RMBS).

Objectives & Significance

• Boost liquidity in the housing finance market.
• Provide investors with long-term investment options backed by reliable assets.
• Integrate housing finance with India’s debt markets.
• Enable financial inclusion through securitization of retail housing loans.
• Help financial institutions unlock capital to issue more loans.

Statements by DFS Secretary

• Housing finance is a key driver of economic growth, with forward and backward linkages to infrastructure and industries.
• Securitization via RMBS can enhance market depth and support affordable housing goals.
• Urged further innovations to mobilize resources for the housing sector.