Indian securitization market grows 20%, vehicle loans lead with 41% share: Crisil
securitization market grew 20% on year to touch Rs. 1.4 lakh crore in the first nine months of this fiscal and vehicle loans had the biggest share among asset classes of 41%, up from 32%, said Crisil ratings.
Pass through certificates (PTCs) accounted for 54% of the overall volume and direct assignment (DAs) comprised the rest.
The volume of personal and business loan securitization doubled with 230 pools securitized.
Securitization is the process of converting an asset into marketable securities that happen in two ways — PTCs and DA. PTCs give the holder income earned from the securitized product.
DA transfers assets directly to the buyer and not through a trust.
“Growth momentum in securitisation is expected to remain strong as NBFCs look to further diversify their resource mix, especially given the increased risk weights for banks’ loan exposures to NBFCs”, said Ajit Velonie, senior director, Crisil Ratings.
However, the Indian PTC market makes up for less than 1% of the global securitisation issuances, which is lower than Latin America, Australia and Canada. The US continues to dominate the securitisation market with 54% share in 2022, according to a recent report by CareEdge Ratings.
“The size of PTC issuances in India is very small, constituting only 0.04% of the GDP in 2022, in stark contrast to the 9.61% in the United States”, said Sanjay Agarwal, senior director, CareEdge Ratings.
