Retail securitisation volumes more than double to Rs 1.9 tn: Crisil

Chennai: Retail securitisation volumes more than doubled to Rs 1.9 trillion, driven largely by need of non-bank lenders to raise capital amid a liquidity crisis, a report said.

Released by rating agency Crisil, the report said total securitisation volume reported in fiscal 2018 stood at Rs 85,000 crore.

Securitisation allows lenders to sell a part of their assets (loans) to raise capital for further deployment or other business purposes.

Reason for higher activity was the Reserve Bank of India (RBI) relaxing the minimum holding period requirement, which increased the availability of eligible securitisable assets, the report said.

Further, a few large mortgage players returned to the market in the first quarter of fiscal 2019 after clarification that securitized assets are not liable to attract goods and services tax (GST), it added.

Factors such as clarity on GST redemption for securitised assets and RBI’s circular on easing norms on selling of securitised also had a bearing on the surge of volume, CRISIL said. “Three asset classes – mortgages, vehicle loans and microfinance loans constituted 84% of the securitisation volume,” the report said.

The spurt in securitisation was pushed by non-banks (housing finance companies and non-banking financial companies), which rushed to securitise receivables as conventional sources of resource mobilisation came under pressure after September 2018.

‘Three asset classes, mortgages, vehicle loans and microfinance loans constituted 84 per cent of the securitisation volume,’ said Krishnan Sitaraman, senior director, Crisil.

‘Growing investor comfort with these asset classes and steady asset quality metrics supported growth. We also saw relatively newer asset classes such as gold loans, small and medium enterprises loans and personal loans also getting securitized, underscoring a potential broad-basing of the market,’ he said.

NT Bureau