Crisil Ratings on Monday said the value of securitisation transactions surged 47% to a lifetime high of Rs 1.02 lakh crore in fiscal year 2017 despite the challenges imposed by demonetisation and the advent of priority sector lending certificates (PSLCs). Significant priority sector lending targets of private and foreign banks and industry-wide chase for retail credit growth led to surge in securitisation of retail assets, Crisil said. “Volume of pass-through certificates (PTCs) rocketed 74% to a decadal high of Rs 42,800 crore, compared with Rs 24,500 crore in fiscal 2016, driven by the clarity on the distribution tax provided in the Budget of February 2016 and demand from private sector banks. Volume of direct assignments reported flattish growth of 6.8% to Rs 47,700 crore,” Crisil said.
The report observes that securitisation transactions in asset-backed securities (ABS) grew 24% to Rs 49,600 crore, largely driven by vehicle loans. Within ABS issuances, the microfinance sector remained under stress because of demonetisation-related impact and local socio-political issues, which continue to impact collections. Mortgage-backed securities (MBS) remained the largest asset class in securitisation, growing 39% and raking up transactions worth Rs 41,000 crore. That also offset the poor credit growth in banking.
While public sector banks had led the way in MBS investments in fiscal 2016, private banks invested in approximately 70% of MBS transactions in fiscal 2017, the agency said. One challenge, though, was the introduction of priority sector lending certificates (PSLCs) which had an impact on securitisation volume. Crisil estimates that offers of Rs 1.26 lakh crore were put on the PSLC platform during the last fiscal year. “Because of ease of purchase and absence of risk and asset transfer, traded volume in PSLCs zoomed to Rs 49,800 crore in its first year. Around 55% of this was from two categories — the PSLC small and marginal farmers, and PSLC agriculture,” Crisil said.