Gold loans surpass vehicle loans to become largest securitised asset class in Q1FY27: CRISIL Ratings

CRISIL Ratings in its latest report has said that gold loans surpassed vehicle loans to become the largest securitised asset class in the April-June quarter of the current fiscal (Q1FY27), marking a significant shift in the overall asset class composition.

It said securitisation, a process through which lenders pool loans and sell them to investors to raise funds and free up capital for fresh lending, saw issuances rising 22% year-on-year to about Rs 60,000 crore in Q1FY27.

The report said over 98% of quarterly issuances came from non-banking financial companies (NBFCs), unlike previous peak periods when banks had also contributed significantly.

During Q1FY27, gold loans accounted for around 31% of total securitisation volume, while the share of vehicle loans eased to about 26% due to lower issuances from a major originator.

According to the report, the rise in gold loan securitisation, along with subdued activity by a large private bank that had driven sizeable retail mortgage-backed securitisation (MBS) volumes last fiscal, reduced the share of MBS to 12% from 21% a year ago.

Business loan securitisation rose to 10% from 7%, driven by secured business loan pools, while microfinance loans rose to 14% from 11%, helped by better portfolio performance and demand for priority-sector assets.

The report further said changing asset mix also influenced the mode of securitisation, with direct assignment transactions accounting for around 54% of the total volume, compared with 46% for pass-through certificate (PTC) transactions. Nearly 87% of securitised gold loans were executed through the direct assignment (DA) route during the quarter.

It noted that banks, including public sector, private and foreign lenders, invested in around 90% of the issuances during the quarter. Other investors included large NBFCs, alternative investment funds, mutual funds, insurance companies, high-net-worth individuals and family offices.