India’s Securitisation Volume Dips To Rs 45,000 Cr In Q1FY25: Icra

After registering record numbers in Q1 of the financial year (FY) 2023-24, India’s securitisation market has indicated a slowdown in the first quarter of the current financial year, the rating agency Icra has said. The country’s securitisation volumes stand at an estimated value of Rs 45,000 crore in Q1 FY2025.

Icra added that the slowdown is attributed to the exit of a large housing finance company (HFC) in Q2 of FY2024. However, the market is still expected to show an upward trend to cross the Rs 2 trillion mark by the end of the fiscal year.

Despite registering an approximate drop of 20 per cent as compared to the same quarter a year ago, the non-banking financial companies (NBFCs) and HFCs continue to utilise securitisation as a tool to raise liquidity. “The securitisation market continues to widen with new originators, even from the banking sector, raising funds through this route in the quarter, which bodes well for the industry’s long-term growth," said Abhishek Dafria, Senior Vice President and Group Head, structured finance ratings at Icra.

Pass-through certificates (PTCs) attributed to approximately 55 to 60 per cent of the overall securitisation volumes, with vehicle loans forming the biggest asset class in PTC issuance. The remaining share is contributed by direct loan sell-downs which include the direct assignments.

The securitisation volumes displayed an upward trend since FY 2022 after recovering from a drastic fall in the financial year 2021. The market showed promising signs when it ended the FY 2024 at a volume of Rs 1,91,800 crore. Now, with the volumes dropping by Rs 11,500 crore in Q1 FY 2025 as compared to the same quarter a year ago, it has raised concerns over the market’s performance in the subsequent quarters. 

With banks actively participating as originators, the volume is expected to reach the Rs 2 trillion mark by the end of the financial year. “We expect securitisation volumes to pick up in subsequent quarters boosting annual volumes above Rs 2 trillion in FY2025," Dafria added.