Published Online:July 2024
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:
Author Name:Reena Rani , Abhineet Saxena , Rahul Agarwal and James Kanda
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:13
Indian banks are continuously facing fund scarcity in meeting loan requirements. They have fewer deposits in comparison to the loan demands, which has led to a decrease in the liquidity of banks and nonbanking institutions. To get rid of this problem, banks use several conventional methods, and securitization is one of them. Securitization is known as the construction of security in any financial transaction. The paper seeks to find out whether securitization process can positively impact Indian banking industry, using selected bank performance parameters. The paper first presents the impact of securitization on banks’ performance; then it depicts the hurdles to the growth of securitization in the country
The most persistent issue for banks is funding, as some banks in developing countries continue to follow traditional lending practices such as keeping loans on their balance sheet until they mature and monitoring borrowers’ performance (Altunbas et al., 2014). Nonperforming loans have raised concern among the top authorities and banking regulators as it slowly results in a decrease in stock prices and profitability loss, which results in a distressing situation. Securitization is a tool introduced to manage NPL on the balance sheet (Miglionico, 2019). Securitization is an American invention. Mortgage, credit card, computer lease, auto loans, and asset-backed and life insurance securitization are the various forms of securitization (Chakraborty, 2013).