Critical analysis of the legal, accounting and tax aspects of securitization in India

Abstract

Securitization is a process where a discrete pool of resources or rather financial assets are packaged and sold to various investors in the form of securities which are mainly serviced by the cash flows from the receivables. The decision of the investors to purchase the security depends upon his assessment of the capacity of the underlying asset to generate the required cash flows, The benefits of securitization include increased liquidity, matching assets and liability duration, lesser capital required and receiving the profit upfront. The investors benefit from having a opportunity to invest in a different kind of asset with a good rating. Unlike the US and UK, securitization in lndia has not developed because of the following reasons.