Securitisation Volumes Surge 17% to ₹45,000 Crore in Q1 FY24: Report

Mumbai, Jul 8 (PTI) Securitisation volumes rose 17 per cent to Rs 45,000 crore in the April-June quarter of this fiscal compared to the year-ago period, a report said on Monday.

The report by domestic rating agency Crisil said the latest quarterly figure is adjusted for the exit of a large housing finance company, though it did not mention the name of the lender.

In March, the RBI asked IIFL to cease a slew of activities including securitisation, which seems to have impacted the volume.

There was also a growth in the number of lenders accessing the market, wherein a lender bundles a bunch of future receivables and sells it to other to manage its funding needs, the report said.

It said 95 originators, including NBFCs and banks, tapped the market to diversify funding sources, compared with 80 in the previous fiscal.

Banks were also more active in the market as originators, with transaction volumes reaching Rs 8,500 crore in the first quarter against Rs 10,000 crore for the entire FY24.

"With banks now maintaining higher risk weights on credit exposure to NBFCs, availability of bank funding at optimal cost will be a key monitorable for NBFCs, making it imperative for them to diversify their resource raising beyond bank loans," Crisil's senior director Ajit Velonie said.

He attributed the higher interest among banks, especially the private sector ones, for alternate sources of funding amid the high credit-deposit ratios.

From the asset class perspective, the share of vehicle loan securitisation, including commercial vehicles and two-wheelers in overall first-quarter volume, surged 4 percentage points year-on-year to 41 per cent with continuing credit growth momentum among top NBFC originators.

Share of mortgage-backed securitisation fell 9 percentage points to 25 per cent, in line with the housing finance company's exit, and regulatory measures on gold loan securitisation led to their share falling to negligible levels compared to 7 per cent in the first quarter of last fiscal, the agency said.

Microfinance accounted for 14 per cent against 10 per cent, personal loan was 11 per cent and business loan securitisation volumes accounted for 9 per cent of the overall pie, it said.

Among the two routes of securitisation, pass-through certificates (PTCs) accounted for a higher 53 per cent share while the rest was direct assignments (DAs).

Banks were the biggest investors, accounting for 90 per cent of the overall pie.

Among the notable transactions, the agency pointed out to large assignments by a private sector bank, saying it helped offset the expected impact on mortgage DA volume due to the exit of a large housing finance company.

Also, PTCs originated by another private sector bank supported the rise in share of personal loan securitisation in the market by 7 percentage points, it said.