Securitisation volumes jump 24% to hit new record of ₹2.35 trn in FY25

Securitisation volumes in FY25 increased 24 per cent to hit the highest level of Rs 2.35 trillion, a report said on Monday.

The volumes of securitisation, which involves passing on future receivables on a loan to address upfront liquidity needs, were lower in the fourth quarter at Rs 58,000 crore as against Rs 63,000 crore and Rs 70,000 crore recorded in the preceding two quarters, as per the report by rating agency CRISIL.

The jump in FY25 volumes was driven by large deals originated by private sector banks and also non-bank finance companies, it said.

Largest private sector lender HDFC Bank has been very active on issuances in FY25 in order to improve its credit-deposit ratio after merging mortgage major parent HDFC into it.

The CRISIL report said number of issuers increased to 175 in FY25, from 165 entities in the year-ago period.

The share of securitisation by banks increased sharply to 26 per cent in FY25 from 5 per cent in FY24 as a few banks used securitisation to manage challenges arising from high credit-deposit ratios.

"That, and steady issuances by large vehicle financiers and mortgage lenders helped offset the decline in volume from microfinance and gold loans," Aparna Kirubakaran, Director, CRISIL Ratings, said.

Among asset classes, vehicle loans including commercial vehicles and two-wheelers accounted for the highest share of securitisation volume at 47 per cent compared to 43 per cent in FY24.

The share of mortgage-backed loans increased to 22 per cent compared to 17 per cent in the preceding fiscal.

As the regulatory curb on a large gold loan originator was lifted only towards the end of second quarter, the share of gold-loan securitisation fell from 6 per cent to 2 per cent.

The asset quality stress in the microfinance sector also affected its securitisation volume, whose share declined to 11 per cent from 16 per cent in the last fiscal.

With microfinanciers continuing to deal with rising delinquencies and implementing new guardrails, disbursements have decreased, it said.

Share of both personal loans and business loans remained stable, it said.

Among the two routes of securitisation, pass-through certificates (PTCs) accounted for 54 per cent of volume while remaining 46 per cent were through direct assignments (DAs).

Overall, banks continue to be the dominant investors in the securitisation market even as other investors, including mutual funds, insurers and alternative investment funds, are increasing their footprint.

Private sector banks continue to invest in both DAs and PTCs, while public sector banks largely opt for DA route, it said.

"We expect the current momentum to continue in fiscal 2026 as credit growth is expected to pick up at both banks and NBFCs and they lean on securitisation, finding it an efficient fund-raising tool," the agency said.