Securitisation volumes likely to touch Rs 60,000 crore mark in Q4FY25

The securitisation volume in the fourth quarter (January-March 2025) is expected to be about Rs 60,000 crore, as banks and non-banking finance companies (NBFCs) cut deals to raise funds and meet priority sector lending (PSL) norms amid liquidity tightness.

 

The securitisation, involving the sale of loans by packaging them through structured financial instruments and direct assignment, was Rs 51,000 crore in January-March 2024 (Q4FY24), according to Abhishek Dafria, group head, structured finance, ICRA.

 

The volumes are typically higher in Q4 because many banks are interested in acquiring PSL assets to meet regulatory norms, apart from the pickup of microfinance disbursements. Bankers said there are early signs of improving disbursements in January, which could, in turn, increase funding needs.

 

The total securitisation volumes—the securitisation market—pass-through certificates (PTCs) plus direct assignment—for FY25 are expected to be Rs 2.4 trillion, up from over Rs 1.91 trillion in FY24, Dafria said.

 

The country’s largest private sector lender, HDFC Bank, has been very active in securitising loans, especially in the vehicle segment, to generate liquidity, a requirement emerging from the merger of the mortgage lender HDFC in July 2023. The Reserve Bank of India’s rolling back of the hike in risk weights on bank lending to NBFCs will also weigh on the actual volume of securitisation in the final quarter of the current financial year.

 

Securitisation enables the banks to improve their credit-to-deposit ratio, given that the pace of deposit accretion has been relatively lower than expected in this fiscal. The situation in the current quarter (Q4FY25) is different from the same period last year, as the system is witnessing pressure on liquidity.