RMBS Development Company Limited Secures Registration Certificate from Reserve Bank of India to Begin Operations

The Reserve Bank of India (RBI) has granted a Certificate of Registration to RMBS Development Company Limited (RDCL), allowing it to begin operations, according to the finance ministry. RDCL aims to serve as a sustainable market intermediary, promoting the growth of the Residential Mortgage-Backed Securitisation (RMBS) market in India.

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National Housing Bank (NHB), a statutory body under the Indian government, established RDCL as its largest shareholder. The company is backed by a diverse group of investors, including banks, Housing Finance Companies (HFCs), Non-Banking Financial Companies (NBFCs), and insurance firms. RDCL's registered office is located in Mumbai, with a paid-up capital of Rs 500 crore.

Market Development and Investor Confidence

The company is set to start operations in March 2025. Its launch will offer investment opportunities for long-term institutional investors like insurance companies and pension funds in the RMBS market. This diverse investor base is expected to boost confidence and bring valuable expertise to the RMBS market's development.

RDCL will engage in various activities to support the RMBS market. These include investing in RMBS issuances, providing second loss credit enhancements, supporting liquidity, and promoting standard processes and documentation. The Certificate of Registration was issued on January 23, 2025.

Growth in Housing Loans

A well-developed RMBS market can complement existing funding sources for Primary Lending Institutions. Over the past five years, individual housing loans have increased from Rs 17.95 lakh crore on March 31, 2019, to Rs 33.19 lakh crore by March 31, 2024. This represents a compound annual growth rate of 13.1%, with expectations for continued growth.

The establishment of RDCL marks a significant step towards enhancing the RMBS market in India. By facilitating investment avenues and supporting market infrastructure, RDCL aims to strengthen the financial ecosystem for housing finance.