Domestic securitisation market volume at all-time high of Rs 1.44 lakh crores

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Published: January 8, 2019 2:03:30 AM

Domestic securitisation market volumes have touched an all-time high of Rs 1.44 lakh crore during the first nine months of FY19, compared with market volume of Rs 84,000 crore for the entire fiscal 2018, according to ICRA.

Domestic securitisation market volume at all-time high of Rs 1.44 lakh crores (Reuters)

Domestic securitisation market volumes have touched an all-time high of Rs 1.44 lakh crore during the first nine months of FY19, compared with market volume of Rs 84,000 crore for the entire fiscal 2018, according to ICRA.

As per estimates, the market has been particularly driven by the prevailing liquidity crisis, with securitisation volumes at around Rs 78,000 crore. Of this, around Rs 73,000 crore was raised by non-banking financial companies (NBFCs) and housing finance companies (HFCs) through sell-down of their retail and SME loan portfolio to various investors (primarily banks).

According to Vibhor Mittal, group head of structured finance ratings at ICRA, “Funds raised by NBFCs and HFCs through the securitisation route helped meet sizeable repayment obligations of the sector in an otherwise difficult market. Investor appetite — particularly from public sector banks and private banks — is high in present times, considering that the investors are not exposed to entity level credit risk, and are seen taking exposure to the underlying pool of retail and SME borrowers (to whom the Seller entities have lent).”

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The securitisation market in India can be segregated into two types of transactions — rated pass through certificate (PTC) transactions, and unrated direct assignment (DA) transactions (bilateral assignment of pool of retail loans from one entity to another). DA transaction volumes soared to Rs 53,000 crore in Q3 FY19 and Rs 94,000 crore in the nine months of FY19 (Rs 49,000 crore in FY18).

Similarly, PTC transaction volumes also surged to Rs 25,000 crore in Q3 FY19 and Rs 50,000 crore in the nine months of FY2019 (Rs 35,000 crore in FY18). Mortgage loans (both housing loans and loans against property asset classes taken together) comprise over 50% of total volumes witnessed during the first three-quarters of FY19.

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