Domestic securitisation activity doubles to Rs 15,200 crore in Q2

Domestic securitisation volumes, which had seen a sharp drop in the first quarter of the financial year 2020-21 (Q1FY21) at Rs 7,500 crore, more than doubled in Q2 at Rs 15,200 crore. The improvement in volumes was supported by both reduced investor wariness and an increase in disbursements by financial sector firms leading to higher financing needs, according to rating agency ICRA.

Securitisation volumes in H2FY21 are expected to be more than double the volumes seen in H1FY21. “We estimate securitisation volumes to be about Rs 0.8-0.9 trillion for FY21, though still significantly lower than the Rs 2 trillion seen in FY20,” ICRA said in a statement.

The increase in the share of gold loans in securitisation, a trend witnessed in FY20, continued in H1FY21 wherein 16 per cent of the value of loans securitised were gold loans.

Both Commercial vehicle (CV) loans as well as mortgage-backed securities emerged as the leading asset classes, each accounting for one-third of overall volumes in H1FY21. In Q2FY21, the CV sector continued its momentum and its share in quarterly volumes remained at similar level of around 30-35 per cent.

Investors in securitisation papers are drawing confidence from the healthy increase seen in collection efficiency across all asset classes. The proportion of assets under management (AUM) which was under moratorium declined gradually during April to August 2020, as the moratorium provided by the Reserve Bank of India (RBI) under the ‘Covid-19 Regulatory Package’ came to an end. Overall, about 45 originators undertook securitisation in Q2 as against only 18 originators seen in Q1.

Abhishek Dafria, vice-President and head - structured finance ratings at ICRA, said “we expect the momentum in securitisation volumes to continue in H2FY21, supported by increased investor confidence. The increase in finding requirement of originators as they restart disbursement and steady easing of business activity as lockdowns end are also expected to drive interest in securitisation.”