Securitization volumes see sharp rise
PremiumThe overall macroeconomic stability resulted in robust credit growth for NBFCs and HFCs on a y-o-y basis
NEW DELHI : A healthy pick up in credit demand for non-banking financial companies and housing finance companies may raise securitization volumes to about ₹33,000 crore in Q1 FY2023, according to ratings agency ICRA.
This would be a 1.9x increase from the ₹17,200 crore of securitized assets in Q1 FY2022 and a 4.4x increase from the ₹7,500 crore of Q1 FY2021.
The key reason for healthy volumes in Q1 of the current financial year is the overall macroeconomic stability, which resulted in robust credit growth for NBFCs and HFCs on a year-on-year basis, ICRA said in a report.
This has come against the backdrop of the first quarter of each of the previous two years being hit by the covid-19 pandemic, resulting in lockdowns and reduced credit demand because of a slowdown in economic activities.
“The securitization volumes witnessed in Q1 FY2023 were almost double the volumes seen in Q1FY2022. With the growth in credit demand, the disbursements picked up for NBFCs and HFCs in Q4 FY2022 and have remained buoyant in Q1 FY2023, resulting in higher funding requirements that have been partly met through the securitization of their retail loans. Securitization is a key tool for these companies and will help them diversify the means of funding and broaden their investor base," said Abhishek Dafria, vice-president and group head, structured finance ratings, ICRA.
“Furthermore, stable collections across all asset classes have led to greater investor confidence and brought them back to the securitization market. Collection efficiencies have remained healthy over the past 5-6 months with ICRA-rated pools showing 97-101% collection in April 2022, a month when collection efforts are typically low," he said.
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Securitization of mortgage-backed loans dominated with a 46% share in total volumes, followed by vehicle loans at 26% and microfinance at 11%. The number of originators who securitised their assets in Q1 FY2023 were 70.