Chennai: Domestic securitisation market volumes have touched an all-time high of Rs 1.44 lakh crore during the first nine months in FY19, as compared to market volumes of Rs 84,000 crore in FY18, a report said.
The monthly run-rate of market volumes were Rs 16,000 crore as companed to Rs 7,000 crore in 2018 fiscal, the report from credit rating agency ICRA said.
As per ICRA estimates, the market has been particularly buoyant in Q3 FY19, driven by the prevailing liquidity crisis, with market volumes at around Rs 78,000 crore (monthly run-rate of Rs 26,000 crore).
Out of this, around Rs 73,000 crore was raised by NBFCs and HFCs through sell-down of their retail and SME loan portfolio to various investors (primarily banks), the report said.
The securitisation market in India can be segregated into two types of transactions – rated Pass Through Certificate (PTC) transactions, and unrated Direct Assignment (D.A.) transactions (bilateral assignment of pool of retail loans from one entity to another).
The study said D.A. transaction volumes soared to Rs 53,000 crore in Q3 FY19 and Rs 94,000 crore in FY19 (Rs 49,000 crore in FY18). Similarly, PTC transaction volumes also surged to Rs 25,000 crore and Rs 50,000 crore in the time.
Mortgage loans (both housing loans and loans against property asset classes taken together) comprise more than 50 per cent of the total volumes witnessed during the period. Banks prefer to buy mortgage loan portfolios from HFCs and NBFCs under the Direct Assignment route because of the stable asset quality and low credit risk perceived in this segment. Other than mortgage loans, vehicle loans, micro loans and lease rentals were some of the other asset segments that found favour with the investors, the report stated.
The report said Priority Sector Lending Certificates (PSLCs) are an alternate avenue available to banks for meeting PSL requirements. PSLCs have gained widespread acceptance in the market with traded volumes of around Rs 2.24 lakh crore as against 1.84 lakh crore.
However, the traded volumes have dipped significantly in Q3 FY19 to around Rs 47,000 crore compared to traded volumes of around Rs 1.77 lakh crore in H1 FY19.
The drop in PSLC volumes in Q3 FY2019 could also be attributed to investors’ preference for securitisation transactions for meeting their PSL requirements, driven by attractive yields on offer for portfolio with good credit quality.
Group head – Structured Finance Ratings at ICRA, Vibhor Mittal, said, “Funds raised by NBFCs and HFCs through the securitisation route helped meet sizeable repayment obligations of the sector in an otherwise difficult market. Investor appetite – particularly from public sector banks and private banks – is high in present times. Securitisation volumes were boosted further by RBI’s relaxation of the minimum holding period (MHP) criteria for long-tenure loans, which increased the quantum of assets eligible for securitisation in the system.”