What Caused the Securitisation Volume to Rise to Rs 49,000 Crore in Q1?

Synopsis
Key Takeaways
- Securitisation volume reached Rs 49,000 crore in Q1 2025-26, up 9% year-on-year.
- NBFCs accounted for 92% of the securitisation market share.
- Gold-loan securitisation surged to 11%, while mortgage-backed loans declined.
- PTCs reached a decade-high of 58% in the market.
- Small and mid-sized NBFCs are facing challenges in growth.
New Delhi, July 7 (NationPress) The securitisation volume experienced a significant increase of nearly 9 percent, reaching approximately Rs 49,000 crore in the first quarter (April-June) of the 2025-26 fiscal year. This marks a rise from Rs 45,000 crore during the same period of the previous financial year, as highlighted in a report from Crisil Ratings released on Monday.
Non-banking financial companies (NBFCs) have been at the forefront, showing a robust year-on-year growth of approximately 24 percent in issuance, which helped to counterbalance the lower origination volumes from banks, thereby bolstering the overall securitisation market, according to the report.
The process of securitisation in banking involves pooling illiquid assets, such as loans, which are then repackaged and sold as securities to investors. This strategy enables banks to free up capital, mitigate risk, and provide investors with access to a diversified investment portfolio.
In the first quarter of fiscal year 2026, NBFCs accounted for 92 percent of the securitisation market, a significant increase from 74 percent for the entire fiscal year 2025. Notably, the top 20 NBFC originators saw their market share rise to around 67 percent in this quarter, up from 56 percent in the first quarter of last fiscal, as per the report.
Aparna Kirubakaran, director at Crisil Ratings, remarked, "The leading NBFCs have consistently leveraged the securitisation market to diversify their resource profiles. Conversely, smaller and mid-sized NBFCs, primarily operating in the microfinance, unsecured personal loans, and business loan sectors, have seen a decline as both NBFCs and investors exercise caution in these areas. Securitisation from banks, largely dominated by a few large private sector banks, experienced lower originations amidst a steady recovery in their overall credit-deposit ratios."
Regarding asset classes, the share of vehicle loans (covering both commercial vehicles and two-wheelers) remained stable at 41 percent. However, the proportion of mortgage-backed loans fell to approximately 21 percent, down from 25 percent in the first quarter of the previous fiscal year, largely due to reduced volumes from a major private bank, the report indicates.
On a positive note, the share of gold-loan securitisation skyrocketed to 11 percent in the first quarter, up from almost negligible levels in the corresponding quarter of the previous year, thanks to the removal of regulatory restrictions on a leading originator.
Meanwhile, securitisation backed by microfinance loans declined to 11 percent from 14 percent, as the sector seeks to recover from rising delinquencies by enhancing underwriting processes and curtailing disbursements in the near term.
Additionally, the share of personal loans and business loans decreased to around 9 percent (from 11 percent) and 7 percent (from 9 percent), respectively, reflecting a slowdown in growth during the first quarter.
Due to varied performances across asset classes, the share of pass-through certificates (PTCs) has surged to a decade-high of 58 percent, while direct assignments (DAs) have dipped to 42 percent. It is noteworthy that DAs are the preferred securitisation route for mortgage-backed loans, with a considerable volume of DA transactions also observed in microfinance and business loans historically, the report concluded.