Rating Rationale
August 10, 2017 | Mumbai
Innovation Trust XXVII Mar 2017
(Originator: Indiabulls Housing Finance Limited)
 'CRISIL AAA (SO) Converted from Provisional Rating to Final Rating for Series A PTCs  
Rating Action
Transaction Details Amount Rated
(Rs Crore)
Outstanding Amount (Rs Crore)& Original Tenure (Months)# Balance Tenure (Months)# Credit Collateral)
(Rs Crore)
Ratings/ Credit Opinion Rating Action
Innovation Trust XXVII Mar 2017 Series A PTCs 292.35 278.05 327 325 33.62 CRISIL AAA (SO) Converted from Provisional Rating to Final Rating
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
#Indicates door-to-door tenure; actual tenure will depend on the level of prepayments in the pool, exercise of clean-up call option, and the extent of shortfalls
&After June 2017 payouts
Detailed Rationale
CRISIL has converted the provisional rating assigned to Series A PTCs issued by Innovation Trust XXVII Mar 2017 to a final rating of 'CRISIL AAA (SO)'. CRISIL had earlier assigned its provisional rating to the PTCs on April 17, 2017. The pool is backed by loan against property (LAP) and home loan (HL) receivables originated by Indiabulls Housing Finance Limited (IBHFL; 'CRISIL AA+/Positive/CRISIL A1+'). The rating on the PTCs is based on the credit quality of pool cash flow, IBFHL's origination and servicing capabilities, the transaction's credit enhancement, and payment mechanism and soundness of the transaction's legal structure. CRISIL has received the final legal documents executed for the transaction. The executed documents are in line with the transaction terms at the time of provisional rating. Hence, CRISIL has converted the provisional rating to final rating.
Please click on the link below for detailed information on CRISIL's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' rating.
Series A PTCs are entitled to receive timely interest and timely principal on a monthly basis. Total credit support available to Series A PTCs includes Rs. 33.62 crore of external credit collateral and Rs. 82.16 crore of internal credit enhancement.
As required, CRISIL has received the following final documents:
Legal Documents
  • Deed of Assignment
  • Trust Deed
  • Credit Collateral Agreement
  • Power of Attorney
Other Documents
  • Legal Opinion
  • Auditors' Certificate
  • Representations & Warranties from Originator
  • Trustee Awareness Letter
  • Information Memorandum 
Key Rating Drivers & Detailed Description
Supporting Factors
  • Credit support available in the structure
    • Credit collateral of Rs 33.62 crore (at the time of origination, 11.5% of pool principal) provides credit support to Series A PTCs. Additionally, the PTCs also benefit from scheduled EIS amounting to Rs 82.16 crore( at the time of origination, 28.1% of pool principal).
  • Good historical portfolio
    • The portfolio performance of the originator has remained robust with negligible delinquencies. The 90+ delinquency for HL and LAP, at a portfolio level, remained below 0.5% over the last few years. As of December 2016, the 90+ delinquency (including write-offs) stood at 0.29% and 0.43% for HL & LAP respectively.
  • Origination and servicing capabilities
    • The originator has a track record of more than 10 years in the mortgage financing business. The overall portfolio performance is an indicator of the strong origination and servicing abilities of the originator
Constraining Factors
  • Mild customer concentration
    • At the time of origination, the top 10 customers in the pool constituted 4.66% of the pool principal.
  • Interest rate risk
    • The investor yield is fixed whereas the pool yield is floating, thereby exposing the PTCs to basis risk.
 CRISIL has adequately factored these aspects in its rating analysis.

About the Pool
At the time of securitisation, the pool consisted mainly of LAP (53.7%) contracts with the underlying borrowers being self-employed. The balance was HL (46.3%) contracts with the underlying borrowers being majorly salaried and few self-employed. The pool had a weighted average seasoning of 14 months, and was geographically diverse, with the top three states accounting for 43.9% of the pool principal. However, the pool had moderate customer concentration with top ten customers accounting for 4.66% of the pool principal. Also, at the time of securitisation, the weighted average loan-to-value ratio was 59.4% and average ticket size was Rs. 23.4 lakhs.

Rating Assumptions at the time of securitisation

To assess the base case collection shortfalls for the transaction, CRISIL has analysed the performance of static pools of loan against property business originated from April 2007 till December 2016 and their performance till December 2016. CRISIL has also analysed the portfolio and performance of rated securitisation transactions while arriving at base case loss scenario.

CRISIL has also factored in pool specific characteristics and estimated the base case peak shortfalls in the pool in the range of 4 to 6 per cent of pool cash flows.
Additionally, the following factors have been considered in the analysis:

  • The pool consists of loans at a floating rate of interest linked to prime lending rate of IBHFL whereas the investor yield is fixed. At present, there is a comfortable gap between the pool yield and the yield promised to the investor. However, during the tenure of the transaction, adverse movement in prime lending rate of the originator may compress the asset side cash flows in relation to the liability side cash flows, thus leading to basis risk. CRISIL has factored this aspect in its analysis by assuming various interest rate scenarios.

  • CRISIL has assumed a stressed monthly prepayment rate of 1.5 to 2.5 per cent in its analysis.

  • CRISIL does not envisage any risk arising on account of commingling of cash flows since CRISIL's short term rating of servicer is 'A1+'

  • CRISIL has adequately factored in the risks arising on account of counterparties (refer to counterparty details below)

  • CRISIL has run sensitivities based on various shortfall curves (front-ended, back-ended and normal) and has adequately factored the same in its analysis.

Counterparty Details


Counterparty Name

Counterparty Rating/ Track record

Effect on credit ratings in case of non-performance

Originator and seller


Rated 'CRISIL AA+/Positive/CRISIL A1+'

No effect.



Rated 'CRISIL AA+/Positive/CRISIL A1+'

Significant effect, because of change in servicing quality and replacement cost of servicer (not factored in by CRISIL). However, CRISIL does not envisage the requirement for replacement.

Collection and Payout Account Bank


Not rated by CRISIL

Negligible effect. Account bank can be changed without impacting the credit rating.

Credit Collateral in the form of Fixed Deposit


Not rated by CRISIL

Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.



Adequate track record

Negligible effect. Can be replaced at minimal cost.

About the Originator
Indiabulls Financial Services Ltd was reverse merged with IBHFL ((Rated 'CRISIL AA+/Positive/CRISIL A1+'), effective from April 1, 2012; the process was completed on March 8, 2013, following the Delhi High Court's approval on December 12, 2012. Post the merger, IBHFL continues to operate as a housing finance company, registered with NHB. The company, along with its subsidiary, ICCL, will continue to focus on asset classes such as mortgages and commercial credit. IBHFL is one of the three largest housing finance companies in India with total assets under management (AUM) of Rs 91,301 crore, including LAP portfolio of around Rs 20,185 crore, as on March 31, 2017. As on March 31, 2017, the promoter group holds 24.0% stake in the company.

For the fiscal 2017, IBHFL had a profit after tax (PAT) of Rs 2,906 crore on a total income of Rs 11,702 crore as against a PAT of Rs 2,345 crore on a total income of Rs 9,266 crore for the previous fiscal.

Past Rated Pools
CRISIL has outstanding rating on nine transactions originated by IBHFL. The collection efficiency for all the pools has remained robust till date. CRISIL is receiving monthly performance reports pertaining to all CRISIL-rated IBHFL originated securitisation transactions.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
Type of Instrument Rated Amount
 (Rs Crore)
Date of Allotment Maturity date* Coupon Rate (%) Outstanding
Credit cum liquidity Enhancement
(Rs Crore)&
Series A PTCs 292.35 27-Mar-17 15-Jul-44 7.13 CRISIL AAA (SO) 33.62
*Indicative maturity date
&Additionally, scheduled excess interest spread, amounting to around Rs.82.16 crore (at the time of origination, assuming zero prepayments) also provides credit support to the PTCs
Annexure - Rating History for last 3 Years
  Current 2017 (History) 2016  2015  2014  Start of 2014
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A PTCs   LT  292.35 CRISIL AAA (SO)  17-Apr-17  Provisional CRISIL AAA (SO)   --    --   -- --
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
Links to related criteria
CRISILs rating methodology for RMBS transactions
Evaluating risks in securitisation transactions - A primer
Legal analysis in structured finance transactions

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