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Credit rating agency ICRA in its latest report has said that the overall securitisation volumes, originated mainly by non-banking financial companies (NBFCs) and housing finance companies (HFCs), is estimated at Rs 38,000 crore in Q3 FY2024, reflecting a sequential de-growth of around 17% from around Rs 46,000 crore recorded in Q2 FY2024. The volumes for Q3 FY2024 also trailed around Rs 43,000 crore securitised in Q3 FY2023, mainly due to the exit of a large HFC from the securitisation market in the current fiscal. 

ICRA expects securitisation activity to pick up again and touch Rs 50,000 crore in Q4 of the current fiscal, which is typically the busiest quarter of the year. It said despite a tepid Q3, the securitisation volumes in 9M FY2024 expanded by 20% to around Rs 1,40,000 crore on a YoY basis on the back of a strong H1. NBFCs and HFCs continue to rely on securitisation as a key funding tool to support their portfolio growth. The securitisation market has witnessed a higher share of pass-through certificates issuances vis-a-vis direct assignments, following the exit of a large HFC this year, which had been securitising its assets predominantly through direct assignments. 

The report further stated that vehicle loans continue to be the largest asset class with 35-40% share in the overall securitisation volumes, followed by microfinance loans with 22-25% share.  Mortgage-backed loans have a share of 18-20%. Unsecured loans, the share of which was on the rise in the last couple of years in the overall securitisation volumes, could be impacted in the near term because of the RBI’s circular in November 2023.