Large ticket transactions by private banks lead securitisation volumes to hit ₹60,000 crore in Q2

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Large ticket transactions by top private banks has likely led securitisation volumes to hit ₹60,000 crore in Q2FY25, up 31 per cent on a year-on-year (YoY) basis, according to ICRA Ratings. Overall, the securitisation volumes for H1FY25 is estimated at about ₹1.04 lakh crore.

“The securitisation volumes in the current year would benefit from participation of private sector banks as originators, given the challenges being faced to raise deposits while the credit demand remains strong,” said Abhishek Dafria, senior Vice President and group head of structured finance ratings at ICRA.

Country’s largest private sector lender HDFC Bank alone securitised ₹ 192 crore of loans in Q2FY25, and in the year-to-date period, the lender has securitised loans amounting to ₹24,600 crore. The lender recently securitised a large car loan pool of more than ₹9,000 crore.

Assets securitised

Dafria says in Q2FY25, about 35 per cent of the assets securitised had been originated by private sector banks, which is a significant boost compared to previous years when banks used to be almost non-existent in this market as originators. The non-banking financial companies (NBFCs) also continue to raise funding through securitisation as it diversifies their borrowing liabilities and improves the asset-liability mismatch.

“The sustenance of volume growth in the coming quarters though remains to be seen, given the appetite for large-size transactions as seen in Q2 may be limited. We believe the market is on track to reach our estimate of ₹2.1 lakh crore in FY25 compared to ₹1.9 lakh crore in FY24,”

Vehicle loan receivables continue to form the highest market share among the various asset classes being securitised, given the presence of large sized NBFCs in this space in the market, as well as the moderate tenure of the product. On the other hand, mortgage backed loans such as home loans or loan against property continue to face challenges in the pass through certificate (PTC) market, given their longer tenure as well as interest rate risks, which act as a deterrent for investors.

“We expect microfinance loan securitisation to witness some momentary challenges due to the recent spike in delinquency levels seen in this asset class, but the introduction of guardrails by the industry body to avoid overleveraging of the borrowers would help regain confidence in H2,” added Dafria.