According to data from rating agency Icra, lenders had sold down loans of about Rs 1.26 trillion in the previous year ended March 2022 (FY22). However, securitisation activity, also known as pooling of loans to repackage them into securities for sale to investors, was still below pre-pandemic level of Rs 1.98 trillion in FY20.
The country’s largest mortgage company, Housing Development Finance Corporation (HDFC), will merge with the largest private lender, HDFC Bank, in FY24.
Healthy credit growth of non-banking finance companies (NBFCs) and HFCs led to the highest post-pandemic quarterly securitisation level in Q4FY23, estimated at Rs 61,000 crore. The second highest level was Rs 52,000 crore in Q4FY22, Icra data showed.
Rising interest rates over the past year have not yet materially dampened credit demand. With the Monetary Policy Committee (MPC) keeping the repo rate unchanged in April, the disbursement trends for NBFCs and HFCs is likely to remain healthy in the near term. This will support the growth in the securitisation market across asset classes.
In FY23, mortgage-backed loans formed the biggest chunk of the overall volumes, at about 33 per cent. This was followed by vehicle loans at 28 per cent. Microfinance loans have made a huge comeback accounting for about 18 per cent in FY23. The share of PTC was 40 per cent in retail securitisation which is largely in line with historical trends. Securitisation of personal loans remained strong throughout the year accounting for three per cent of the total value.