Non-Banks Sold Rs 2.4 Lakh Crore In Loans Over The Last Year, Says ICRA

Housing financiers and non-bank lenders have raised around Rs 2.36 lakh crore through securitisation and loan sell-downs over the last twelve months, rating agency ICRA said.

In the first half of the current fiscal year, non-banking financial companies and housing finance companies sold over Rs 1.02 lakh crore of loan assets compared to Rs 1.98 lakh crore in FY19, the rating agency said in a report released on Monday. The unprecedented increase in the volume of loan-pools being sold down reflects a slowdown in fund raising from traditional borrowing channels such as loans, bonds and commercial paper issuances,” it added.

While home loans and loans against property accounted for around 45-50 percent of the overall securitisation volumes in FY18 and FY19, their share has come down to 30 percent in the first half of this fiscal.

Around Rs 92,000 crore worth of loan assets were sold through the pass-through-certificate route in the last 12 months, as per ICRA’s estimate, while direct assignment transactions accounted for over Rs 1.45 lakh crore in volumes during the same period.

Direct assignment deals involve the sale of large loan pools to a buyer in a bilateral transaction. Pass-through-certificates involve pooling together different loan tranches, getting them rates and then selling units in this pool to investors.

While the majority of mortgages are sold directly to banks or other investors (48 percent in H1 FY20), the majority of commercial vehicle and car loan securitisation transactions took place through the PTC route (43 percent in H1 FY20), ICRA data showed.

“Private banks were the major investor category for PTC transactions and their need for acquiring priority sector assets drove their appetite. However, in recent years a host of new investor segments such as NBFCs, foreign portfolio investors, high networth individuals and insurance companies have also been participating,” ICRA said,