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

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

Synopsis

The latest report reveals a remarkable rise in securitisation volume, reaching Rs 49,000 crore in Q1, primarily driven by robust performance from NBFCs. This increase raises questions about the factors influencing such growth and its implications for the financial market. Explore the details of this significant development.

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.

Point of View

It is essential to recognize the dynamic shifts in the securitisation market, particularly the leading role played by NBFCs. This growth underscores the need for strategic evaluations within the financial sector to adapt to evolving market conditions while ensuring investor confidence.
NationPress
25/07/2025

Frequently Asked Questions

What is securitisation?
Securitisation is the process of pooling together illiquid assets like loans, repackaging them, and selling them as securities to investors, allowing banks to free up capital and manage risk.
How much did securitisation volume increase?
Securitisation volume rose nearly 9 percent to around Rs 49,000 crore in the first quarter of 2025-26.
What role do NBFCs play in securitisation?
NBFCs have been crucial in driving securitisation growth, accounting for 92 percent of the market in the first quarter of fiscal 2026.
What are the major asset classes in securitisation?
The primary asset classes include vehicle loans, mortgage-backed loans, gold-loan securitisation, microfinance loans, personal loans, and business loans.
What trends were observed in the securitisation market?
The report indicates varied performance across asset classes, with PTCs reaching a decade-high while DAs have decreased.