Management vision2020

Securitization           S ecuritization is the process of pooling and repacking of homogeneous   long term illiquid financial assets and non-performing assets into marketable securities, which can be sold to investors. Thus it is taking a primary role in imparting liquidity & profitability to marketers by converting long term illiquid and non-performing assets into short term liquid and performing assets. The process leads to creation of financial instruments that represents ownership interest in/ is secured by segregated income producing assets /pool of assets, where the pool of assets collaterises the securities. These assets are generally secured by personal/real property such as automobiles, real estates or equipment loans (but in some cases unsecured). Securitization in India is regulated by the SARFAESI Act 2002- (Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest). Process of Securitization involves the following: 1.   

Mutual Funds             The concept of mutual fund is originated in Belgium in 1882. A trust that pools that pools the savings of investors who share a common financial goal is known as a ‘Mutual Fund.’ The money thus collected then invested in financial market instruments such as shares, debenture and other securities like government paper etc. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Investments in securities are spread over a wide cross-section of industries and sectors, thus allowing risk reduction to take place. Diversification reduces risks because all stock/debt instruments may not move in the same direction and in the same proportion at the same time . Features / Benefits (1)         Mobilising Small Savings : Mutual funds mobilize the funds by selling their own shares known as units. (2)         Investment Avenue : Mutual funds provide an id

Credit Rating             Credit rating system organised in the US in 70’s. The high levels of default which occurred after the Great Depression, in the US Capital market gave the impetus for the growth of credit rating. The default of $82 million of commercial paper by Penn Central in the year 1970 and the consequent panic of investors in commercial papers resulted in massive default and liquidity crisis. This prompted the capital issuers to get their commercial paper programs rated by independent credit rating agencies. Moreover, regulatory agencies in the US made rating mandatory for institutions such as Govt. Pension Funds and Insurance companies, who could not buy securities rated below a particular grade. In addition, investors themselves became aware of the rating mechanism and started using rating extensively as a tool for risk management. Merchant bankers, underwriters and other intermediaries involved in the debt instruments. Many other factors have contributed to the