Delinquencies in India's securitised loans moderated in 2015: Fitch

Resilient economy helped in the dip in delinquencies for 2013- and 2014-issued transactions

Global rating agency Fitch today said that the build-up in delinquencies for Indian asset-backed securities (ABS) transactions done in 2015 was slower than that in 2014.

Showing stability returning to asset book, delinquencies for 2013- and 2014-issued transactions fell in 2015 mainly due to a resilient economy that rebounded from rather slow growth in 2014.

According to regulatory norms, banks have to maintain a certain amount of exposure to designated priority sectors like agriculture and small and medium sized enterprises.

ABS investment is one of the main channels by which foreign banks with branches in India can satisfy priority sector lending (PSL) requirements, unlike local banks, which lend directly to PSL borrowers, Fitch said.

Tractor loans have accounted for almost 15% of securitised pools backing Fitch-rated transactions since first half of 2015, compared with a maximum of 10% before that.

Fitch expects tractor loans to form a larger part of Indian ABS transactions due to greater demand from institutional investors for exposure to the agricultural priority sector.

Lenders now run tractor-lending businesses long enough for tractor-loan data to include a stress period, it added.