In a move to churn its asset portfolio and earn fee-based income, IDBI Bank has securitised the retail loans of Tata Motors Finance worth over Rs 200 crore.

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Rating agency Crisil has assigned ‘P1+(so)’ rating to Series A1 pass-through certificates issued for the deal. These certificates are backed by cash flows from assignment transactions pertaining to retail loan receivables originated by Tata Motors Finance.

Ashok Motwani, general manager, IDBI Bank, said that the lender’s exposure to securitised papers at peak was about Rs 6,000 crore. It has sold a rated pool of papers worth around Rs 1,500 crore, while repayments and pre-payments have been close to Rs 3,000 crore.

Now, the lender is left with an exposure of Rs 1,500 crore to the securitised pool. Though public sector bank advances account for 75 per cent of the debt market, they do not securitise their loan portfolio actively, he added.

Indian private and foreign banks operating in the country are active in securitising retail loans as well corporate loans.

Till date, the public sector lender has not securitised loans originating from it. The lender is planning to securities some infrastructure loans too.

The Indian securitisation market constitutes a minuscule part of the overall debt market. The volumes declined to Rs 52,000 crore in 2008-09 from Rs 70,000 crore in 2007-08, Motwani said.

Asset-backed securities (ABS) and collateralised debt obligations (CDO), investment grade securities backed by a pool of bonds, loans and other assets, have a major share in the securitisation market.

A few ABS transactions were downgraded but there have been no defaults in the personal loan segment. A few CDOs have been downgraded and defaults were mainly in originate-to-sell category comprising securitisation transactions with back-to-back arrangement to sell loan. However, defaults in this category are significantly smaller as compared to defaults on bank loans.

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