Securitisation volumes likely to touch ₹60,000 crore in Q2FY25: ICRA

Domestic rating agency ICRA in its latest report, has said that securitisation volumes are estimated to have surged to ₹60,000 crore in the July-September quarter (Q2FY25), and are likely to cross ₹2.1 lakh crore in the current financial year (FY25). The ₹60,000 crore expected to be achieved in the second quarter is 36 % higher than the preceding June quarter and a 31% jump over the volumes in the same period a year ago.

Lenders raised over ₹45,000 crore through loan securitisation in the first quarter of the fiscal year and ₹ 1.9 lakh crore in FY24. Typically, lenders bundle up future receivables on a set of loans they have made and sell them to other entities at a discount, which helps them meet their liquidity needs.

Without naming HDFC Bank, which has guided towards adopting this route, ICRA said large private sector lenders are driving the volumes to improve their credit-to-deposit ratio amid the low deposit growth. The securitisation volumes in the current year would benefit from the participation of private sector banks as originators, given the challenges being faced in raising deposits while the credit demand remains strong.

It said the September quarter saw 35% of the volumes originating from private sector banks, which is a huge jump given the past experience where such lenders used to be non-existent as originators.

According to the report, driven by the need to tackle asset quality mismatches, non-bank finance companies continue to raise funding through the securitisation route. Securitisation is largely being done through the issuance of pass-through certificates (PTCs) in the current fiscal while the proportion of direct sell-down or direct assignments (DA) has reduced.

Vehicle loan receivables continue to form the highest market share among the various asset classes being securitised, given the presence of large-size NBFCs in this space in the market as well as the moderate tenure of the product. Mortgage-backed loans such as home loans or loans against property continue to face challenges in the PTC market, given their longer tenure as well as interest rate risks, which act as a deterrent for investors.