Securitization Surge: A 25% Rise in Financial Year Projections

Domestic rating agency Icra reported that securitization volumes jumped 80% year-on-year, reaching Rs 68,000 crore in the December quarter. The agency raised its total volume estimates to Rs 2.4 lakh crore for the fiscal year, driven by private banks' participation. However, NBFC disbursements faced growth challenges.

Domestic rating agency Icra announced on Monday that securitization volumes have surged by 80% year-on-year, culminating in Rs 68,000 crore in the December quarter. The agency adjusted its estimates upwards for the year's total volumes, which now stand at Rs 2.4 lakh crore, exceeding previous forecasts.

The financial system has observed a shift in securitization deals, allowing lenders to trade future receivables for upfront cash. This leap, representing a 25% jump from Rs 1.92 lakh crore in FY24, highlights the active role played by private sector banks in boosting the numbers, even as typically it's the non-bank lenders using this route.

Abhishek Dafria, Icra's group head for structured finance ratings, emphasized that the 'war for deposits' pressures banks towards securitization to maintain favorable credit-to-deposit ratios. Despite challenges like asset quality stress in personal loans, the trend is expected to persist in the near-term to stabilize financial ratios.

(With inputs from agencies.)