Surge in Securitisation: Private Sector Banks Lead the Charge

Securitisation volumes in India have surged to Rs 60,000 crore in Q2, with projections of crossing Rs 2.1 lakh crore for the year. This growth is driven by private sector banks facing deposit challenges amidst strong credit demand, marking a shift in funding strategies.

Securitisation volumes in India have surged significantly, reaching Rs 60,000 crore during the July-September quarter, according to a report released on Monday. This marks a remarkable 36% increase from the previous June quarter and a 31% spike from the corresponding period last year, domestic rating agency Icra noted.

The impressive figures put securitisation on track to surpass Rs 2.1 lakh crore for the current financial year. Traditionally, lenders bundle future receivables from their loans and offload them to other entities at a discount to enhance liquidity. Private sector banks are spearheading this volume growth due to low deposit growth, pushing to improve their credit-to-deposit ratios.

In addressing asset quality mismatches, non-bank finance companies persist in securing funds through securitisation, primarily using pass-through certificates this fiscal year. Vehicle loan receivables make up the largest asset class in this market, while mortgage-backed loans face challenges due to their longer tenures and interest rate risks.

(With inputs from agencies.)