Rating Rationale
May 15, 2019 | Mumbai
Indian Receivable Trust 12
(Originator: Reliance Capital Limited)
Rating downgraded to 'CRISIL BBB+ (SO)' ; Placed on 'Watch Negative' 
Rating Action
Transaction Details Amount Rated
(Rs Cr)
Outstanding amount
(Rs Cr) 
Credit Collateral
(Rs Cr) 
Ratings/ Credit
Rating Action
Indian Receivable Trust 12 Series A PTCs 158.23 17.40 21.68 CRISIL BBB+ (SO)
[Downgraded from 'CRISIL AAA (SO)'
Placed on 'Rating Watch with Negative Implications']
Downgraded and placed on 'Rating Watch with Negative Implications'
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has downgraded its ratings on Series A pass through certificates (PTCs) issued by 'Indian Receivable Trust 12' to 'CRISIL BBB+ (SO)' from 'CRISIL AAA (SO)'. The rating is placed on 'Rating Watch with Negative Implications'. The transaction is backed by loan against property (LAP) receivables originated by Reliance Capital Ltd. (RCL) and serviced by Reliance Commercial Finance Ltd. (RCF).
CRISIL had published a credit bulletin on April 24, 2019, providing an update on the performance of the pool backing the PTCs issued by Indian Receivable Trust 12. As highlighted then, the cash collateral available under the transaction fully covers the principal outstanding on the PTCs and the transaction is amortised by 89%. Furthermore, the transaction collection performance of the pool remains satisfactory.
However, it was recently brought to CRISIL's attention that the rating-trigger linked transfer of collections to the collection and payout account (CPA) within seven days of collections as set out in the executed transaction documents is yet to be operationalised. Maintaining the structural integrity of securitisation transactions by all counterparties is crucial to the credit quality of PTCs, especially given that the credit profile of the Servicer has weakened further. RCF has defaulted on its debt obligations.
In light of non-adherence to transaction terms and the significantly weakened credit profile of the Servicer, the ratings on PTCs serviced by RCF have been downgraded and placed on 'Rating Watch with Negative Implications'.

Key Rating Drivers & Detailed Description
Constraining Factors
  • Non-adherence to transaction terms
    • The transaction documents set out rating-linked triggers regarding transfer of collection by the Servicer to the CPA within seven days of collections, which is yet to be operationalised. Maintaining the structural integrity of securitisation transactions by all counterparties is of utmost importance for the credit quality of the PTCs.  
  • Weakened credit quality of the servicer

    • RCF is the servicer under the transaction. Any deterioration in credit quality of the servicer translating into a disruption in collection at the ground level and any asset quality implication thereof would negatively impact the credit quality of the PTCs.
Supporting Factors
  • Healthy collection efficiency
  • 64 months post securitisation, cumulative collection ratio (CCR) for the transaction has remained robust at 98.0% with overdue at 1.0%
  • High amortisation and credit support available in the structure
  • As after April 2019 payout, the pool is amortised by 89.0%. Credit enhancement of Rs.21.68 crore is available in the structure fully covers the future principal payouts.
Liquidity position
The credit-cum-liquidity enhancement available in the transaction is Rs. 21.68 crore which is in the form of fixed deposits with DCB Bank, Andhra Bank and Yes Bank. The credit enhancement fully covers future principal of Series A PTCs.
CRISIL has adequately factored these aspects in its rating analysis.
About the pool
The pool securitised comprises home loan receivables. As after April 2019 payouts, the pool has high seasoning as evidenced by its amortisation of 89.0%.
Pool Performance Summary

Asset class LAP Receivables
Structure Par with Excess Interest Spread
Months post securitisation 64
Amortisation 89.0%
Credit collateral as a percentage of future principal Fully covered
Credit collateral utilisation 0.0%
Cumulative collection ratio (CCR)! 98.0%
Last 3 months average MCR! 94.1%
Total overdues $ 0.0%
!CCR = {Total collections in the pool / (Total billings + opening overdues amounts at the time of securitisation)}
!MCR = Monthly collections in the pool / Monthly billings
$ Total overdues = (Total overdues plus loss on sale of repossessed assets in the pool expressed as a percentage of initial pool principal)

Key rating assumptions
CRISIL has analysed the performance of the securitised pools of RCF as of April 2019 payouts. Monthly collection efficiencies have been satisfactory.  
However, the ratings are driven by the heightened counterparty risk.

About the Originator and Servicer
RCL is a Core Investment Company. The company is part of the Reliance group led by Mr Anil Dhirubhai Ambani. RCL's subsidiaries have a significant presence across various financial services businesses like Asset Management, Life Insurance, General Insurance, Commercial & Home Finance, Broking & Distribution of financial products and Proprietary Investments.

The commercial finance business of RCL was demerged into RCF with effect from April 1, 2016. RCF is involved in financing of Small and Medium Enterprise (SME) loans, structured finance, construction equipment loans, loan against property, microfinance loans, infrastructure finance, construction finance, commercial vehicles and supply chain finance. The company's AUM stood at Rs.16,475 crore and Rs. 17,257 crore as on March 31, 2018 and December 31, 2018 respectively.

Past rated pools
CRISIL has ratings outstanding on one transaction originated by RCL. CRISIL is receiving monthly performance report pertaining to the securitisation transaction.
Key Financial Indicators (RCL consolidated)
As on/for the period ended Unit March 31, 2018 March 31, 2017
Total assets Rs cr 93,851 82,209
Total income Rs cr 19,898 17,640
Profit after tax Rs cr 1,309 1,086

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 Cr)
Date of Allotment Maturity Date# Coupon Rate (%) (p.a.p.m) Outstanding
Ratings/credit opinions
Credit collateral (Rs Cr)
Series A PTCs 285.01 20-Dec-13 15-Oct-32 Floating^ CRISIL BBB+ (SO)/Watch Negative 21.68*
#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option
^Linked to Base Rate of investor
*Additionally scheduled excess interest spread (EIS) amounting to Rs. 4.10 crore (assuming zero prepayments) also provides credit support to PTCs (as after April 2019 payouts)
Annexure - Rating History for last 3 Years
  Current 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Series A PTCs LT 17.40 CRISIL BBB+ (SO)/Watch Negative   --   13-07-18 CRISIL AAA (SO) 30-06-17  CRISIL AAA (SO) 05-07-16  CRISIL AAA (SO) CRISIL AAA (SO)
All amounts are in Rs.Cr.
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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