The volume of securitisation transactions by housing finance companies (HFC) and non-banking finance companies (NBFC) soared by 48% year-on-year to `1 lakh crore in the first half of the current fiscal, according to a report by Crisil Ratings.
Non-banks, which had come under stress following a series of defaults by group companies of IL&FS last year, have turned towards securitisation of assets to raise funds.
The ratings agency said the growth was driven by new loan originators and asset classes. The number of active originators saw a rise to about 100 in the first half of the fiscal, against around 70 in the year-ago period.
In terms of asset classes, the growth was broad-based, with both mortgage-backed securitisation (MBS) and asset-backed securitisation (ABS) logging healthy uptick in volume, the agency found.
MBS volume rose 16% year-on-year, even as HFCs that were large originators last fiscal had limited transactions in Q2FY20 because of muted or negative growth, with the entry of new originators and the hunt for alternate sources of funding driving volume.
The ABS segment saw volume zooming 69%, aided by doubling in vehicle loan securitisation growth and continued expansion of the asset class base. "Securitisation of gold loan, personal loan, two-wheeler loan and lease rental receivables are now mainstream, with newer originators increasingly participating in such transactions," the agency said.
Pass through certificates (PTCs), which remain the preferred route for ABS transactions, spurted 63% year-on-year. The share of PTCs in securitisation transactions rose to 41% from 36% in FY19. Direct assignment (DA) volumes grew 39% on-year to `59,000 crore.
"Heading into the second half of the fiscal, the prospects of the market remain strong. Expansion of the originator base and mainstreaming of non-conventional asset classes augur well for the market. A bigger boost, however, is expected from regulatory interventions," said Rohit Inamdar, senior director at Crisil, in a press statement.