IFMR Capital-CRISIL Workshop on Securitisation

The two-day workshop on “Securitisation of Microfinance” by IFMR capital in association with CRISIL took place on the 15-16th Dec 2009. The workshop held at the IFMR Campus had 26 participants from 21 different Micro Finance Institutions (MFIs) engage in a series of sessions aimed at encompassing the different facets of securitisation for MFIs.

The workshop started off with Mr. Pramod Jain, a chartered accountant with years of experience in financial markets, taking a session on the basics of debt concepts, providing conceptual knowledge to the participants on basic issues.

Mr. Prasad Koparkar, the head of Structured Finance Ratings Group at CRISIL, took the next session that provided a market overview on and covered the basics of securitisation.

Being an excellent orator, Mr. Koparkar, held the participants in the sway through his clarity of thought and knowledge sharing across a variety of topics.

He spoke about the different types of asset-based funding, including loan against escrow account and portfolio sale and securitisation through SPV. He also spoke about the different nuances of securitisation and gave a really good overview of the Indian and global securitisation markets.  Some of the topics that were also covered in the session:

• Benefits of securitisation for MFIs
• Role of the parties involved in a securitisation transaction
• Categories of securitised instruments

One of the most interesting sessions was to be on “Securitisation Concepts”, which involved practical examples with regard to cash flows in different securitisation scenarios. The agenda for the session:

• Basics of structuring including Par and Premium structures
• Time, credit and risk types of tranching
• Understanding credit enhancement mechanisms

The session also touched upon the first Equitas microfinance transaction and there was a healthy discussion on this. Mr. Suchindran, Head of Treasury, Equitas, and Ms. Sucharita Mukherjee, CEO, IFMR Capital, shared their experience and gave a perspective on this.

Highlighting the importance of IFRS accounting system and how MFIs would have to adapt to this new system to be implemented in March 2012, Mr. Jain, undertook the next session on accounting and tax-related issues in securitisation.

Later, sharing her experience in a session on investor feedback on micro-loan securitisation, Ms. Meenal Madhukar, Investor Relations Head, IFMR Capital, spoke about IFMR Capital’s experience in dealing with a range of investors, including banks, mutual funds and insurance companies.

She gave a perspective on the requirements of capital markets, the cost structure in a typical securitisation transaction and the kind of documents required for an MFI for such transactions. Her lively talk managed to get the best feedback from the participants.

Also from IFMR Capital, Mr. Kartikeya Singh, part of the Legal & Risk Management Team, gave a perspective on the legal and regulatory issues in securitisation, followed by a Q&A session.

Overall the workshop managed to get a very good response and feedback from the participants involved, fueling IFMR Capital’s intent to conduct more such workshops on diverse topics such as risk management and operational excellence for MFIs.

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Sagar Thakar, from IFMR Capital, contributed to this post.