Mumbai: IDBI Trusteeship which manages a portfolio of more than Rs 43 lakh crores, is targeting a further 12% AUM growth in the coming fiscal year across its trusteeship business, including debenture trusteeship, security trusteeship, alternate investment funds, infrastructure investment trusts and masala bonds. This after a 2018 Sebi rule had asked large companies to raise at least 25% of their borrowings in debt securities.

“For our trusteeship business, we are targeting AUM growth by 12%, from April onwards Sebi has laid the onus of valuation and verifying the collateral on the trustee services, this will bring lot of legal and compliance responsibilities on the trustee,” said Samuel Joseph, Chairman, IDBI Trusteeship Services Limited.

Fund raising through Corporate Bonds has been in range of Rs 7 lakh crore annually, for past three years. Analysts expect that the debenture market may grow by 7% to 8% in next financial year. In its borrowing framework for large entities, the markets regulator had mandated that big corporates would raise 25% of their incremental borrowing by way of issuance of debt securities.

Joseph also added that the trustee would look at expanding its product suite to increase more assets under charge.

“There will be an expansion of the product suite that we offer and within the same product there will be much more value add,” he said. “The infrastructure thrust of the government will put in motion more InviTs, REITs, more credit availability will make the debenture and loan market more deeper and I feel the market will expand further.”

As on March 11, 2021, IDBI Trustee has assets under management of Rs 43 lakh crore. It is the largest player in the debenture space with AUM of Rs 27 lakh crore followed by loan charges of Rs 11 lakh crores and a AUM of Rs 5 lakh crore for other businesses like AIF, InvIT, Masala Bonds among others. Under security trustee and share pledge it holds security value of Rs 12 lakh crores as on date.

It’s also acting a trustee company for 15 out of the 21 peer-to-peer lending transactions that have been approved by the RBI. The company has also signed with a few lenders to give trustee services in co-lending transactions.

Joseph added that in order for the market to become transparent banks would have to sign up with third party trustee services rather than holding on to documents related to loan collateral.

“Banks should not hold the security at all, it should be with an independent third party,” he said. “Tomorrow if the borrower wants to change the bank consortium he can just change the name of the security holders. This is a much convenient way rather than keeping the title deeds with banks.”

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