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NBFCs raise Rs 2.36 lakh crore via loan securitisation

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Non-banking finance companies (NBFCs) have stepped up securitisation of their loan portfolios in the past one year, raising as much as ₹2.36 lakh crore since the IL-FS crisis in September 2018, rating agency ICRA said in a report.

The funds raised were much needed in light of the liquidity squeeze these companies faced from other sources like banks and bond markets. NBFCs and housing finance companies (HFCs) together raised ₹2.36 lakh crore between October 2018 and September 2019 by selling down their loans in the open market through securitisation or through bilateral direct assignments (DAs).

ICRA expects securitisation volumes to touch an all time high the fiscal ended March 2020, with direct assignments remaining at the forefront. “NBFCs and HFCs continue to rely heavily on securitisation as a tool for raising funds, manage liquidity and to correct any ALM mismatch,” said Abhishek Dafria, head - structured finance ratings at ICRA.

“The partial credit guarantee scheme of the government of India will also add bulk to the overall market volumes.

With the PSBs directed to disburse funding of ₹1 lakh crore under the PCG scheme by February 2020, we believe that the size of the securitisation market would be at an all-time high, in excess of ₹2 lakh crore for FY2020.” ICRA estimates that pass through certificate (PTC) volumes were around ₹92,000 crore in the past one year, while direct assignment deals were much higher at ₹1.45 lakh crore in the same period.

Direct assignment volumes however declined from ₹87,450 crore in the second half of fiscal 2019 from ₹58,400 crore in the first half of fiscal 2020 mainly due to the weakened credit profile of a few originators that were traditionally large and active. Priority sector lending driven transactions as a percentage of PTCs have also reduced to 52 per cent in the first half of fiscal 2020 compared to 88 per cent in fiscal 2017 as new investors like FPIs, HNIs and insurance companies who do not have any specific need to buy priority sector assets.




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