Securitisation
” (Reference 2 - Investopedia). Mortgage-backed security (MBS) is one important example of securitization, which is a type of asset-backed security that is secured by a collection of mortgages. The process of securitization is briefly explained as follows: Pre-requisites For securitization to take place the pre-requisites are: • Existence of assets, which can be securitized, e. g. loans against property mortgaged. As part of their normal financing activity, banks and financial institutions grants loans to individuals and corporates against security of some property mortgaged to them. These can form subject matter for securitization. • The bank or financial institution which originates the loans must be regulated and authorized by the regulatory authority of the country, e. g. the Central Bank.