PTC - Diversify Your Risk And Manage Your ALM / CRAR

Pass-through Certificate (PTC) represents an undivided interest in a pool of underlying assets, like mortgages, loans, property, equity shares, etc. Its's one of the most preferred form of Fixed Income Securities where an investor choose to participate basis his cash flow desires.

Process - Flow

1. Origination: NBFCs originate loans (e.g., mortgages, auto loans, MSME loans, micro loans) and hold them as separate asset class.
2. Pooling: These asset classes are pooled together to form a larger portfolio of the same or different asset classes.
3. Creation of SPV / Trust: The Pool is then transferred to a Special Purpose Vehicle (SPV) or Trust which in-turn issues pass-through certificates representing proportionate ownership in the underlying pool.