Loan assets securitized by Nbfcs soared by 43% to Rs 1.25 Lakh Cr in FY22: Icra

The total value of loan assets securitized by non-bank financial companies (NBFCs), including housing finance companies (HFCs), increased by around 43% in the last financial year to reach 1.25,000 crore from rupees, driven by a rapid economic recovery and a lower base. effect, said a report on April 18. The amount of loans securitized by NBFCs and HFCs in FY21 stood at Rs 87,300 crore, ICRA Ratings said in a report.

The agency expects securitization volume to touch the pre-COVID level of Rs 2 lakh crore in the financial year 2023-24. “The growth (in securitization volumes) in FY22 was due to the lower base in FY21 and the rapid resumption of economic activities after the second pandemic wave in the first quarter and the limited disruptions seen during the third wave,” the agency said.

Securitization refers to the pooling of cash flow generating assets such as mortgages, loans, bonds and the subsequent issuance of securities in the capital markets backed by these collateral pools. Retail asset securitization was also in line with the earlier estimate of Rs 1.1 lakh crore, while additional wholesale loan securitization of nearly Rs 15,000 crore was seen in the fourth quarter of last fiscal year.

Abhishek Dafria, Vice President and Group Head (Structured Finance Ratings), ICRA Ratings, said the final quarter of FY22 began with uncertainty resulting from high COVID-19 infection rates in the country. However, the less severe wave resulted in less disruption to business, thanks to which securitization volumes in the fourth quarter continued their upward trajectory, he said.

In the fourth quarter, securitization volumes were around Rs 50,000 crore, which was in line with pre-COVID quarterly volumes, Dafria said. For FY22, total securitization through direct sale (DA) transactions (bilateral sale of a pool of retail loans between two entities) accounted for nearly 55% of total annual volumes, less than about two-thirds observed in recent years. says the report.

This was partly due to the securitization of wholesale loans in the fourth quarter, which was done through the pass certificate (PTC) route, he said. Within the PTC segment, auto loans accounted for one-third of volumes, while DA was dominated by mortgage-backed loans.

Loans from microfinance institutions (MFIs), which had lost investor preference after the onset of the pandemic, saw strong traction in the fourth quarter. MFI loans accounted for 11% of total volume seen in FY22, with more than half of annual volumes occurring in the fourth quarter alone.

Dafria expects FY24 securitization volumes to reach pre-COVID levels of nearly Rs 2 lakh crore, disregarding potential changes in market size once a first-tier HFC merges. plan carried out.


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