PremiumMumbai: Securitization volumes by non-banking financial companies (NBFCs) and housing finance companies (HFCs) are estimated to have surged about 2.3 times on a year-on-year (y-o-y) basis in Q1 FY22 to ₹17,500 crore, rating agency Icra said.
Due to the Covid-19 pandemic and resultant nationwide lockdown in March 2020, securitization volumes had fallen significantly in Q1 of fiscal 2021. The country witnessed a much more severe second wave around the same time this fiscal which had resulted in another round of lockdowns. Despite this, the securitization market clocked higher volumes and as per estimates, it said. According to the rating agency, securitization volumes for FY22 could be over ₹1.2 trillion, of which majority would be in the second half of the financial year if there is no resurgence of covid-19 infections in the country.
Abhishek Dafria, vice-president and group head (structured finance ratings) at Icra said that despite the onset of second wave in April 2021, securitization volumes saw a robust y-o-y growth in Q1 FY22.
“This was because the lockdowns during the current fiscal were localized and less stringent compared to the nationwide lockdown last year. Further, there was gradual ease in lockdowns in June across most geographies and gradual improvement in collection efficiencies of NBFCs thereby giving investors necessary comfort to participate in securitization," said Dafria.
He added that investors also applied stringent pool selection criteria whereby borrowers who had availed moratorium or whose accounts were restructured were filtered out.
Traditionally,securitization through the Direct Assignment (DA) route has accounted for about two-thirds of total volumes, Icra said. The balance one-third share is accounted for by Pass Through Certificate (PTC) transactions. In Q1 FY22, the volumes were almost equally distributed between DA and PTC, it said. However, in Q1 the volumes were almost equally distributed between DA and PTCs.
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