Daijiworld Media Network – Mumbai

Mumbai, Apr 7: India's securitisation market hit a new milestone in FY2024-25, witnessing a 24% surge in volume to reach a record Rs 2.35 lac cr, according to a report released by Crisil Ratings on Monday. The growth was led by larger deals by private banks and consistent fund mobilisation by NBFCs.

Securitisation allows financial institutions like banks and NBFCs to convert loans and receivables into marketable securities, enabling capital mobilisation and risk transfer.

Aparna Kirubakaran, Director at Crisil Ratings, highlighted the changing dynamics: “The share of securitisation by banks jumped to 26% in FY25 from just 5% in FY24, as banks turned to this tool to navigate high credit-deposit ratios. This, coupled with steady issuance by vehicle financiers and mortgage lenders, balanced out the decline from microfinance and gold loan segments.”

Despite a softer Q4 with issuances of Rs 58,000 cr, down from Rs 70,000 cr in Q2 and Rs 63,000 cr in Q3 the fiscal year still posted a new high. The market also saw greater participation, with 175 originators compared to 165 in FY24.

Key Highlights:

• Vehicle loans remained dominant, accounting for 47% of volumes (up from 43%).
• Mortgage-backed loans rose to 22% of total issuances (from 17%).
• Gold loans dropped sharply to 2% from 6%, due to regulatory curbs earlier in the year.
• Microfinance securitisation declined to 11% from 16%, owing to rising delinquencies.
• Personal loans and business loans held steady at 6% and 10%, respectively.

Of the two routes used, Pass-Through Certificates (PTCs) contributed 54% of volumes, overtaking Direct Assignments (DAs) at 46%. PTCs were the preferred method for vehicle and personal loans, while DAs dominated mortgage and microfinance segments.

FY25 also witnessed the emergence of structured deals like turbo amortisation and replenishment structures, especially for unsecured loans, offering flexibility and enhanced investor protection.

Investor Trends: Banks remained the biggest investors in securitised products, though mutual funds, insurance firms, and alternative investment funds are expanding their roles. While private sector banks showed a balanced interest in both PTCs and DAs, public sector banks leaned heavily on DAs. Foreign banks, meanwhile, continued to favour PTCs.

With both banks and NBFCs expecting stronger credit growth in FY26, securitisation is projected to remain a preferred fund-raising avenue, the Crisil report concluded.