Securitisation volumes likely to jump to Rs 1.70 trn in FY23: Icra

Securitisation volumes for FY23 can reach Rs 1,70 lakh crore, as against Rs 1,26,500 crore in FY22, a domestic rating agency estimated on Wednesday.

Icra Ratings said securitisation volumes are estimated to have jumped 58 per cent to Rs 1.17 lakh crore in the April-December 2022 period as compared to the same period last year.

At Rs 1.17 lakh crore, the volumes are higher than the retail assets securitisation in the entire FY22, which stood at Rs 1.26 lakh crore, Icra Ratings said.

Securitisation refers to an activity where a financier or lender transfers future receivables on a loan or a bunch of loans to others, which helps with immediate liquidity requirements.

Buoyancy in securitisation can be attributed to the stable macroeconomic scenario and high credit growth for non-bank lenders, the agency said, adding that on a quarterly basis, Q3FY23 volumes grew slightly at 3 per cent over the preceding quarter.

"After a gap of two years (FY21 and FY22), the current year is witnessing a balanced trend in the securitisation market. The volumes in all three quarters stood in the range of 30-35 per cent of the YTD (year to date) securitisation, which contrasts with the last two years when securitisation volumes were impacted in certain quarters due to the Covid-19 pandemic," its group head for structured finance Abhishek Dafria said.

He added that the high credit growth has prompted non-bank finance companies and housing finance companies to return to securitisation as a tool for raising funds.

Securitisation volumes have long been dominated by mortgage-backed loans, followed by vehicle loans.

The trend reversed in Q3FY23 when vehicle loans, at 33 per cent of the total volumes, inched slightly ahead of mortgage loans, the agency said.

Its sector head Sachin Joglekar said securitisation of vehicle loans witnessed a healthy growth mainly on account of a few large originators, which securitised high volumes driven by the PSL (priority sector lending) nature of the underlying loans.