India’s First RMBS Listing: What It Means for Investors and the Housing Sector

India has taken a major step in deepening its financial markets with the launch of its first-ever Residential Mortgage-Backed Securities (RMBS) listing. LIC Housing Finance led the way by raising ₹10 billion through 20-year securities with a 7.26% coupon rate. This move is expected to open new doors for both institutional investors and the housing finance ecosystem. In this blog, we'll break down what RMBS means, why it matters, and what to watch for next.

What Are RMBS and Why Are They Important?

Residential Mortgage-Backed Securities (RMBS) are financial instruments backed by a pool of home loans. They allow housing finance companies to:

• Unlock capital tied up in loans

• Improve liquidity and balance sheet efficiency

• Expand their lending capacity
  
  

Globally, RMBS markets are well-established in the U.S. and Europe. India’s debut marks a major milestone in diversifying funding for housing finance institutions.

LIC Housing Finance’s RMBS Breakthrough

Amount Raised: ₹10 billion
Tenure: 20 years
Coupon Rate: 7.26%
Type: Listed RMBS, tradable in the secondary market

This listing makes LIC Housing Finance the first to tap public markets with a long-tenure RMBS, creating a blueprint for other lenders to follow.

NHB’s Big Push – ₹100–200 Billion Coming Soon

The National Housing Bank (NHB) has announced plans to raise ₹100–200 billion this fiscal through similar RMBS listings. This initiative will:

• Boost long-term capital for housing finance companies

• Support the government’s affordable housing goals

• Attract institutional investors seeking stable, long-tenure debt instruments

Expect public sector lenders, NBFCs, and private players to queue up for similar listings in the coming months.

What This Means for Investors

Opportunities:

• Stable returns from long-term, secured instruments

• Portfolio diversification beyond traditional bonds

• Exposure to India’s growing real estate and mortgage sector

Risks to Watch:

• Credit quality of underlying home loans

• Prepayment risk in low-interest-rate scenarios

• Liquidity of RMBS in the secondary market

Conclusion

India’s first RMBS listing is more than just a financial innovation—it’s a game changer for the housing finance ecosystem. With NHB’s aggressive plans to scale this instrument, investors, lenders, and regulators are closely watching how this new asset class evolves.