Securitisation activity unaffected by HDFC merger, surges 35% in H1: CRISIL

Securitisation volumes have grown 35 per cent to over Rs 1 lakh crore in the first half of the current fiscal, domestic ratings agency Crisil said on Thursday.

The overall volume of securitisation -- wherein one lender bunches up a loan or a set of loans and passes on the future receivables to another financier against an upfront payment -- had stood at Rs 75,000 crore in the April to September period, it said.

It attributed the jump in activity to banks' continued interest in retail assets, and strong credit growth among originating Non-Banking Financial Companies (NBFCs).

The volume remained unfazed by the exit of a large housing finance company (HFC) from the securitisation space in the second quarter of this fiscal, following its merger with an affiliate bank.

"The exit of one of the largest originators last quarter has been more than made up by other financiers. The overall first-half volume is now trending in line with pre-pandemic levels when the FY20 volume had touched Rs 1.9 lakh crore," Crisil Chief Rating Officer Krishnan Sitaraman said.

Without naming HDFC, the agency said the exit of "the large housing finance company" has led to some shifts in market dynamics, with asset class mix moving in favour of non-mortgage loans, and the share of direct assignments declining vis--vis pass-through-certificates.

The share of retail mortgage-backed securitisations, which used to be the dominant asset class, has dropped to 25 per cent in the first half of this fiscal from 40 per cent in the year-ago period, it said.

Vehicle loans have replaced mortgages as the dominant asset class, with their share in overall volume rising from 31 per cent to 39 per cent.

Microfinance loans constituted 14 per cent of volume, in line with the first half of the last fiscal.

Among other asset classes, business and personal loan segments saw greater traction with their volume share in the first half increasing to 8 per cent and 4 per cent, respectively, from 4 per cent and 3 per cent, respectively, in the last fiscal, Crisil added.