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Icra Ratings in its latest report said that gold loan securitisation volumes were about Rs 4,400 crore in the first half of the current fiscal (H1 FY2022) (similar to volumes seen in H1 FY2021) forming 10 per cent of the overall domestic securitisation volumes as compared to 6 per cent seen in FY2020 (pre-Covid period). It said during the Covid-19 pandemic, gold loans have been considered to be a safer asset class given the availability of a liquid collateral and rising gold prices.

It mentioned while direct assignment (DA) transactions have a dominant share, the share of PTCs in gold loan securitisation has been rising. Investors like HNIs and mutual funds have shown a higher appetite in investing in gold loan PTCs as compared to other asset classes. It stated while gold loan securitisation had seen some slowdown post 2012 due to the removal of priority sector lending classification and introduction of minimum holding period (MHP) requirements for securitisation, the volumes have again picked up since FY2019.

Besides, it expects the overall growth for gold loan NBFCs to remain robust in the near to medium term which would support healthy volumes of gold loan securitisation with its share in overall securitisation market being 8-10 per cent. Securitisation involves transactions where credit risks in assets are redistributed by repackaging them into tradable securities with different risk profiles. It may give investors of various classes an access to exposures which they otherwise might be unable to access directly.