ICRA estimates NBFCs, HFCs securitisation volumes at Rs 61,000 crore in Q4 FY23

Credit rating agency ICRA in its latest report has estimates that securitisation volumes, originated largely by non-banking financial companies (NBFCs) and housing finance companies (HFCs), at Rs 61,000 crore in Q4 FY2023, the highest quarterly volumes seen since the onset of the Covid-19 pandemic. The volumes for the quarter are largely dominated by securitisation of retail loans (90%). The overall securitisation volumes in FY2023 stood at Rs 1,78,000 crore, i.e. a healthy 41% expansion over Rs 1,26,500 crore seen in FY2022.

In FY2023, Mortgage-backed (MBS) loans formed the biggest chunk of the overall volumes at 33%, followed by vehicle loans at 28%. Microfinance loans have made a huge comeback accounting for 20% and 18% of Q4 FY2023 and full year FY2023 volumes, respectively. Securitisation is carried out either through direct assignment (DA) transactions (bilateral assignment of pool of retail loans from one entity to another) or through the pass-through certificate (PTC) route (instruments issued by bankruptcy remote trusts).

In FY2023, the share of PTC was 40% in retail securitisation which is largely in line with the historical trends. Securitisation of personal loans has remained strong throughout the year accounting for 3% of the total volumes