Q1 securitisation volume dips 20% to Rs 45,000 cr

The ICRA Ratings project securitisation volume to pick up in the subsequent quarters and cross the Rs 2 trillion mark by March.
Excluding housing finance companies, securitisation volume remained largely flat on an annualised basis
Excluding housing finance companies, securitisation volume remained largely flat on an annualised basis(FIle Photo)

MUMBAI: Despite increased participation by banks, the overall securitisation volume has declined by 20 per cent on-year to Rs 45,000 crore in the June quarter of the current fiscal, primarily because of the exit of the industry leader HDFC after its reverse merger with its subsidiary HDFC Bank from July 2023.

Excluding housing finance companies, securitisation volume remained largely flat on an annualised basis, but non-banks and the HFCs continue to utilise securitisation as a funding tool to raise liquidity as well as to diversify their funding avenues and grow their investor base, according to an analysis by Icra Ratings.

The agency projects securitisation volume to pick up in the subsequent quarters and cross the Rs 2 trillion mark by March.

According to Abhishek Dafria, a senior vice president and group head for structured finance ratings, at the agency, the securitisation market has declined in Q1 as overall disbursement growth of NBFCs has moderated, especially in the unsecured lending space, following the cautionary advice from the Reserve Bank. However, the market continues to widen with new originators, even from the banking sector, raising funds through this route in the quarter, which bodes well in the long term.

Accordingly, the agency expects securitisation volume to pick up in subsequent quarters and cross Rs 2 trillion in FY25, he said.

The share of pass-through certificates (PTCs) form 55-60 per cent of the overall securitisation volume with the remaining coming in from direct loan sell-downs or direct assignments.

Vehicle loans continue to form the biggest asset class in the PTC space, though leading originators in this space have carried out lower securitisation in Q1 on-year, possibly due to the general elections that would have dampened the sale of commercial vehicles.

Microfinance and mortgage-backed loans, however, continue to be largely securitised through direct assignments. The proportion of personal loans has slightly moderated due to the recent concerns raised by the RBI, though its current proportion remains relatively lower in the overall volumes.

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