Securitisation volume increases 17% in Q1 FY25 to Rs 45,000 crore

Participation of banks as originators offsets impact of HDFC's exit from market

Securitisation volume remained robust at Rs 45,000 crore in Q1 FY25, reporting a 17 per cent year-on-year like-for-like growth, with 95 originators, including several banks, tapping the market to diversify funding sources. Active participation by banks as originators, with Q1 transactions totalling Rs 8,500 crore, offset the impact of erstwhile housing finance major HDFC's absence, rating agency Crisil said in a note on Monday.

In FY24, banks had originated about Rs 10,000 crore worth of securitisation transactions.

“…large assignments by a private sector bank helped offset the expected impact on mortgage direct assignment (DA) volume due to the housing finance company exit. Pass-through certificates (PTCs) originated by another private sector bank supported the rise in share of personal loan securitisation in the market by approximately 700 basis points,” the Crisil note said.

According to Ajit Velonie, Senior Director at Crisil Ratings, due to high credit-deposit ratios, private banks are now looking at alternative sources of funding, including securitisation. Also, with banks maintaining higher risk weights on credit to non-bank financing companies (NBFCs), it has become imperative for them to look at alternate sources of funding.

Banks dominated the market as the largest investors, holding over 90 per cent market share, while NBFCs, alternative investment funds, and high net worth individuals constituted the remaining investors. Public sector banks were active through the acquisition of retail direct assignment pools, while private and foreign banks were predominantly investing in pass-through certificates, the rating agency said in its research note.

Among asset classes, vehicle loan securitisation dominated the market, followed by mortgage-backed securitisation, and gold loans.