According to rating agency ICRA, securitisation volumes, originated largely by non-banking financial companies (NBFCs) and housing finance companies (HFCs), recorded the highest volume in the March quarter since the onset of the Covid-19 pandemic.
The volumes for the March quarter were largely dominated by the securitisation of retail loans which recorded 90% of the total share. The overall securitisation volumes in FY23 were at ₹1.78 lakh crore versus ₹1.26 lakh crore in FY22.”The upward trend in the securitisation volumes continued for another quarter as NBFCs and HFCs witnessed an increase in funding requirements to meet the growing credit demand,” said Abhishek Dafria, group head-structured finance ratings at ICRA. “The rising interest rates have not yet materially dampened credit demand. With the RBI keeping the repo rate unchanged, we expect the disbursement trends for NBFCs and HFCs to remain healthy…, which will support the growth in the securitisation market across all asset classes.”
In FY23, mortgage-backed loans formed the biggest chunk of the overall volumes at 33%, followed by vehicle loans at 28%. Microfinance loans made a huge comeback accounting for 20% of the overall share.
“This growth reflects both the resilient performance of retail asset pools and the preference of banks to grow retail assets and meet priority sector lending (PSL) requirements,” said Vineet Jain, senior director at CARE Ratings. “Bank lending to NBFCs grew by 32% YoY and there is a positive correlation between interest rate and relative premium for PSL assets. Both these factors augur well for the securitisation market.”
