RDCL Receives RBI Approval to Transform India’s Mortgage-Backed Securitisation Market

The company, established by the National Housing Bank (NHB), is set to become a key player in the development of India’s Residential Mortgage-Backed Securitisation (RMBS) market.

On January 23, 2025, RMBS Development Company Limited (RDCL) received the Certificate of Registration (CoR) from the Reserve Bank of India (RBI) to commence its operations. The company, established by the National Housing Bank (NHB), is set to become a key player in the development of India’s Residential Mortgage-Backed Securitisation (RMBS) market.

The NHB, a statutory body under the Government of India, is the largest shareholder in RDCL. The company is supported by a diverse mix of stakeholders, including Banks, Housing Finance Companies (HFCs), Non-Banking Financial Companies (NBFCs), and Insurance Companies.

Vision and Role of RDCL

RDCL aims to function as a commercially sustainable market intermediary, facilitating the growth of the RMBS market in India. Its operations will focus on creating investment opportunities for long-term institutional investors such as Insurance Companies, Pension Funds, and Provident Funds.

Key objectives of RDCL include:

• Investing in RMBS issuances.
• Providing second-loss credit enhancements to support risk management.
• Offering liquidity solutions to Primary Lending Institutions (PLIs).
• Promoting standardized processes, documentation, and practices for a robust RMBS ecosystem.

These initiatives are expected to instill confidence among stakeholders and enhance market transparency, ultimately fostering the development of a sustainable securitisation framework.

Why RMBS Market Development Matters

The RMBS market holds significant potential as a reliable complement to traditional funding sources for PLIs. Over the last five years, the outstanding individual housing loans in India have grown from ₹17.95 Lakh Crore (as of March 31, 2019) to ₹33.19 Lakh Crore (as of March 31, 2024), achieving a Compound Annual Growth Rate (CAGR) of 13.1%. This trend highlights the growing demand for housing finance, underscoring the need for a well-developed RMBS market to meet liquidity demands.

RDCL’s initiatives are expected to unlock opportunities for secondary market investors while providing liquidity to PLIs and diversifying funding sources for housing finance.

Operational Readiness and Capital Structure

RDCL, with a paid-up capital of ₹500 crore, is headquartered in Mumbai, the financial capital of India. The company plans to commence its operations by March 2025, ensuring its readiness to address market needs effectively.

Additional Strategic Focus

Beyond market intermediation, RDCL is also tasked with fostering innovation in securitisation practices, improving investor confidence, and supporting policy initiatives to strengthen housing finance. By working collaboratively with government agencies, regulatory bodies, and market participants, RDCL aims to bridge gaps in the ecosystem and create a scalable, efficient RMBS market.

Conclusion: A Game Changer for Housing Finance

The operationalization of RDCL marks a pivotal moment for India’s housing finance sector. By aligning with the government’s mission to enhance housing affordability and infrastructure, RDCL is poised to drive transformative change in the RMBS market, enabling financial institutions and investors to contribute meaningfully to India’s economic growth.

With its strong institutional backing and clear vision, RDCL is set to play a critical role in reshaping India’s housing finance landscape.