The growth in volumes shows a 1.9-fold growth as compared to securitized assets of Rs 17,200 crore in Q1 FY22 and 4.4-fold growth as compared to Rs 7,500 crore in Q1 FY2021, the report said.
“Securitization volumes seen in Q1 FY23 were almost double the volumes seen in Q1 FY2022. With an increase in credit demandpicked up for disbursement NBFC And HFC remained buoyant in Q4 FY22 and Q1 FY23, resulting in higher funding requirements which have been partially met through securitization of their retail loans,” said Abhishek Dafria, the agency’s vice president and group head (Structured Finance Ratings). Told.
Securitization is the pooling of various types of contractual loans such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets that generate receivables) and their respective cash flows to third-party investors in the form of securities. There is a financial practice of selling in , which can be described as bonds, pass-through securities, or collateralized debt obligations (CDOs).
The main purpose of the securitization market is to redistribute credit risk away from promoters to a broader spectrum of investors who can bear the risk, thus aiding financial stability and providing an additional source of funding.
Dufria said securitization is an important tool for NBFCs and HFCs, which will help them to diversify their funding instruments and widen their investor base.
“Moreover, stable collections across all asset classes have boosted investor confidence and brought them back to the securitization market,” he said.
Collection capacity has been healthy over the past 5-6 months, with the agency’s rated pool showing 97-101 per cent collections in April 2022, a month when collection efforts are generally low, Dufria said.
“If there are no pandemic-related disruptions, we expect the securitization volume to cross Rs 1.5 lakh crore in FY12 as against Rs 1.3 lakh crore in FY12,” he said.
Securitization in India can be done either through direct assignment (DA) transactions (bilateral assignment of a pool of retail loans from one entity to another) or through the pass-through certificate (PTC) route (insolvency-issued instruments by remote trusts). goes.
Traditionally, the share of DA is around 60 per cent and the remaining 40 per cent is by PTC. For Q1 FY23, the share of DA and PTC was in line with this previous trend.
“Securitization of mortgage-backed loans dominates with a share of about 46 per cent in the total securitization volume, followed by the vehicle loan segment at about 26 per cent and microfinance at about 11 per cent,” the report said.
It added that the number of people who had securitized their assets in the first quarter of FY12 increased from 46 in the first quarter of FY12 to 70. PTI HV HVA