Accounting for Securitization in India: The Past, Present & Future

Abstract

Securitization is one amongst many innovative financial practices that has emerged in the financial sector as an effective instrument for managing risk return portfolio of financial institutions and investors. Though Securitization has been prevalent in India since 1990s, holistic regulatory guidelines dealing with this issue have begun to develop only in the aftermath of global financial crisis. The present paper traces the history of regulatory aspects of Accounting Treatment of Securitization in India and the accounting treatment in the light of introduction of IFRS converged Accounting Standards i.e IND-AS. This area of accounting was plagued by conflicting provisions in the past and the same has been carried forward even after the introduction of IND-AS. It is expected that the regulatory agencies will work together to come out with a comprehensive set of accounting guidelines in the near future as IND-AS are applicable to limited financial entities w.e.f financial year 2018-19. Till then, the boundaries remain fuzzy. The authors hope that the present paper will be useful to accounting professionals, academicians, analysts, researchers and students as it brings together the plethora of accounting regulation(s) on this aspect under one umbrella and also discusses the challenges emerging out of it.