Regulatory changes, wider participation, and innovative structures to nudge further growth
Securitisation1 volume continued on its upward momentum, surging ~20% on-year to ~Rs 1.4 lakh crore in the first nine months of this fiscal (see Chart 1 in annexure). This is despite the exit of one of the largest housing finance company (HFC) originators in the second quarter of the fiscal. If one were to adjust for the HFC volume and consider only securitisations by other originators, the market grew by a whopping 40% on-year.
The rise and spread of the market is expected to continue, given expected healthy credit growth among NBFCs, the retailisation agenda of banks that are the largest investors in the market, and the recent regulatory guidelines on risk weights by the Reserve Bank of India (RBI).
Said Ajit Velonie, Senior Director, CRISIL Ratings, "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. In the first nine months of this fiscal, we have already seen the market widen with the number of originators crossing 135 as compared to 120 in the corresponding period last fiscal."