Securitisation growth 42% in nine months this fiscal

Securitisation volume in India jumped 42 per cent on-year and past the Rs 1.15 lakh crore mark in the first nine months of this fiscal, said credit rating agency CRISIL Ratings Ltd.

According to CRISIL Ratings, the market activity in the quarter ended December 2022 continued the momentum witnessed in April to September period.

Activity was broad-based, with wider participation, as the number of originators crossed 120 compared with about 100 in the preceding fiscal.

Among new originators in the securitised market were small finance banks that have increased their securitised issuances in recent quarters and added this mechanism as one of their routes to access incremental liquidity.

Growth in the non-mortgage space was led by commercial vehicle (31 per cent) and microfinance (14 per cent) loans, CRISIL Ratings said.

The credit rating agency said the unsecured loans, including personal and business loans, also continued to draw investor attention, comprising seven per cent of the securitised assets compared with three per cent in fiscal 2022. The share of property-backed loans, though, declined to about 38 per cent from about 43 per cent.

Senior Director and Deputy Chief Ratings Officer Krishnan Sitaraman said: “The securitisation market is continuing to regain its mojo post the pandemic, propped up by a resurgence in microfinance and increasing preference among investors for vehicle loans. Additionally, personal and business loans seem to be gaining greater acceptance, bringing diversity to the bouquet of asset classes being securitised.”

According to the report, direct assignment (DA) transactions accounted for 60 per cent of the nine-month transaction quantum with this route being utilised for sell-down of most mortgage and gold loan pools. Correspondingly, the share of pass-through certificates (PTCs) were at 40 per cent, down marginally from 41 per cent a year ago.

On the investor side, foreign banks and multinational institutions (about 14 per cent) were more active, given their preference for investing in PTCs backed by loans advanced to economically weaker sections.

Private (53 per cent) and public sector (25 per cent) banks remained the largest investor groups, while the share of nonbanks remained low with mutual funds also making sporadic investments.

The public sector banks have invested in PTC-backed pools comprising vehicle, microfinance, and unsecured business loan receivables in recent quarters, the report said.

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