India’s securitisation market is on a steady trajectory, with an estimated volume of Rs 68,000 crore for the third quarter of the fiscal year 2025 (Q3 FY25), according to the latest figures from credit rating agency ICRA.
This level of activity is consistent with the securitisation volumes seen in the previous quarter, reflecting a stabilising trend in the sector.
The growth in securitisation during Q3 FY25 has primarily been driven by private banks, which have turned to securitisation as a tool to enhance their credit-to-deposit ratios.
This strategy comes in response to a slower-than-expected growth in deposits, prompting these banks to look for alternative ways to maintain healthy liquidity levels.
Abhishek Dafria, Senior Vice President and Group Head of Structured Finance Ratings at ICRA, highlighted that while private banks have been instrumental in pushing market volumes upwards, non-banking financial companies (NBFCs) have not seen similar growth.
The muted performance among NBFCs can be attributed to various industry challenges, which have led to a slower pace of disbursements, especially in unsecured lending sectors like microfinance and personal loans.
According to ICRA’s estimates, private banks are responsible for around Rs 25,000 crore of the total securitisation volume in Q3 FY25. Meanwhile, NBFCs have securitised the remaining Rs 43,000 crore.
Notably, HDFC Bank, India’s largest private lender, contributed around Rs 12,000 crore to the total volume, showcasing its substantial involvement in the securitisation market.
The performance of the securitisation market in Q3 FY25 comes on the back of a robust second quarter, during which volumes surged by 56 per cent compared to the same period last year, reaching approximately Rs 70,000 crore.
This rise was largely driven by significant issuances from major players in the market, including a large private sector bank and a few vehicle-financing NBFCs.
As a result of these developments, securitisation volumes in India surpassed Rs 1.15 lakh crore in the first half of FY25, marking a 15 per cent increase from the previous year.
This growth has been attributed to the large-scale originations by key market participants, including a big private sector bank and NBFCs with a focus on vehicle finance.
The steady performance of the securitisation market reflects the ongoing adjustments within the Indian financial landscape, where banks and NBFCs are seeking innovative ways to optimise their portfolios amid a challenging macroeconomic environment.
With the sector showing resilience in the face of industry headwinds, there is cautious optimism for continued growth in the coming quarters.
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