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    Secondary loan market to go live with Rs 1000 cr deals by Axis

    Synopsis

    To begin with, Axis Bank has executed three project-financing deals of nearly ₹1,000 crore using SLMA-compliant standardised documentation that makes them qualify for listing and trading on the platform.

    Axis Bank
    After deliberations over nine months with the 10 member banks and legal counsels, the final draft of the finance documents for term loans was submitted to the SLMA.
    Mumbai: An online platform for loan trading will go live in India soon, with Axis Bank offering the first lot for sale, bringing to the local market a practice that is common in developed economies.

    The Secondary Loan Market Association (SLMA) has developed a marketplace where institutions can buy or sell corporate loans with a level of standardisation, which is expected to result in better price discovery and aid borrowers to reduce costs over a period. A group of 10 banks including State Bank of India, Bank of Baroda, Axis Bank and ICICI Bank formed the association.

    To begin with, Axis Bank has executed three project-financing deals of nearly ₹1,000 crore using SLMA-compliant standardised documentation that makes them qualify for listing and trading on the platform.

    The private sector lender will put up these loans on the platform, as it intends to sell those fully or partly. The transactions will likely happen this month, marking a new chapter in the secondary loan market in India. Axis is in talks with other lenders to initiate selling those loans.

    "This whole process will give maturity to India's secondary loan market for corporate loans, which is missing unlike in developed economies," said Neeraj Gambhir, group executive and head of treasury at Axis Bank. "We have executed those bespoke primary market deals as a prelude to the secondary trading on the SLMA platform."
    axis

    The loans given by Axis Bank are long-term, going up to 15 years.

    Two years ago, the idea of SLMA was mooted under the aegis of the Reserve Bank of India. It was billed as a self-regulatory body formed by 10 member banks. Punjab National Bank, Canara Bank, HDFC Bank and Kotak Mahindra Bank are also part of the group, along with two foreign banks - Standard Chartered Bank and Deutsche Bank.

    The move gained pace during the pandemic when the authorities felt the need for a vibrant credit market which has to be accessible across the board with ease. "Axis Bank was appointed by the Core Group of 10 banks to lead the sub-committee for drafting the standard documents, which would facilitate easy trading of loans," said Gambhir.

    While the website for trading was ready last year, banks officially launched the platform only a few weeks ago. The SLMA is currently operating from the Mumbai office of the Indian Banks' Association (IBA).

    Cyril Amarchand Mangaldas was appointed as the legal counsel for drafting standard loan documents under the SLMA framework. Wadia Ghandy & Co acted as the counsel for reviewing the draft.

    After deliberations over nine months with the 10 member banks and legal counsels, the final draft of the finance documents for term loans was submitted to the SLMA. It was then shared with the IBA for circulation to all banks for adoption.

    In the global arena, the Asia Pacific Loan Market Association (APLMA) promotes growth and liquidity in the primary and secondary loan markets of the Asia-Pacific region. The APLMA India chair is currently held by an Axis Bank representative.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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