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India’s credit landscape is rapidly evolving, and Pass-Through Certificates (PTCs) are driving this transformation.
What Are PTCs?
PTCs are financial instruments backed by loan pools, allowing NBFCs to transfer loan ownership to banks. This ensures liquidity, risk distribution, and access to lower-cost funds.
How Do They Work?
✔ Loan Pooling & Sale – A bank/NBFC pools loans and sells them to a Special Purpose Vehicle (SPV).
✔ PTC Issuance – The SPV issues PTCs to investors, who earn returns from loan repayments.
✔ Fund Flow – Borrowers repay loans → Servicer collects payments → SPV distributes funds to PTC holders.
Why Are PTCs Gaining Traction?
✅ Unlocks Capital – Converts loans into tradable assets, enabling further lending.
✅ Risk Distribution – Balances risk between banks & NBFCs, enhancing credit stability.
✅ Investor Benefits – Provides fixed-income opportunities under regulatory supervision.
✅ Financial Inclusion – Expands access to credit for underserved & rural communities.
With regulatory advancements & growing adoption, PTCs are poised to revolutionize co-lending and credit markets.
What’s your take? Will PTCs reshape the future of credit? Drop your thoughts below!
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