The securitisation market is expected to touch a record of ₹2-lakh crore in FY24 led by significant expansion in credit growth, which is expected to boost securitisation volumes in Q4 FY24, according to CARE Ratings.

Quarterly securitisation market volume has remained in the range of ₹42,000-45,000 crore so far in the three quarters of FY24,  with total securitisation volumes reaching ₹1.01-lakh crore in H1 FY24, excluding erstwhile HDFC.

For the nine-month period ended December 2023, volumes were at ₹1.44-lakh crore, registering a growth of 27 per cent yoy. Excluding HDFC, this implies a growth rate of 52 per cent for originators other than HDFC, CARE said.

“The stagnant volumes in Q3 FY24 may be linked to a mismatch in the pricing expectations of investors and originators, influenced by tighter liquidity conditions and the RBI’s concerns about the rapid expansion in unsecured lending. Traditionally, the final quarter of the fiscal year records the highest volumes, and current trends suggest that this pattern is likely to continue,” the note said.

Direct assignment (DA) transactions comprised about 49 per cent of the total volume for 9M FY24, trailing behind pass through certificate (PTC) transactions for the second consecutive quarter, largely owing to the HDFC merger.

Mortgage-backed securitisation (MBS) transactions comprised 40 per cent of DA volumes during 9M FY24, asset-backed securitisation (ABS) for 37 per cent, and microfinance (MFI) loan transactions for 23 per cent.

PTC volumes were driven by ABS pools constituting approximately 73 per cent of PTC issuances, followed by MBS loans at 16 per cent and MFI loans at 11 per cent. Vehicle loan financing (includes pools backed by loans against commercial vehicles, cars, two-wheeler construction equipment, tractors, etc.) accounted for around ₹45,600 crore or 63 per cent of PTC issuances.