Debt securitisation volumes in India rose modestly to Rs. 49,000 crore during April-June 2025, up from Rs. 45,000 crore in the same quarter last year, reflecting an evolving financial landscape. Non-banking financial companies (NBFCs) emerged as dominant originators, contributing 92% of market activity, offsetting a decline in bank-originated securitisations. Key segments like vehicle loans remained stable, while mortgage-backed securities saw a dip, and gold loan securitisations gained momentum following regulatory easing. With increasing reliance on pass-through certificates and a cautious approach by smaller NBFCs, the securitisation market is poised for steady growth, supported by retail credit expansion and prudent investor participation.
Growing Momentum in Debt Securitisation
The Indian debt securitisation market witnessed a steady uptick in volumes during the first quarter of fiscal 2025-26, rising to Rs. 49,000 crore compared to Rs. 45,000 crore year-on-year, according to a recent report by Crisil Ratings. This gradual growth underscores the market's resilience amidst changing credit conditions and regulatory dynamics.
Securitisation, a financing mechanism where lenders transfer future receivables of loans to a third party often at discounted rates, continues to be a vital funding avenue for financial institutions seeking liquidity and portfolio diversification.
NBFCs: The Driving Force
Non-banking financial companies (NBFCs) took a commanding lead in the securitisation landscape, accounting for approximately 92% of issuances in Q1 FY26—a notable increase from 74% in the previous fiscal year. This surge was predominantly driven by large NBFC players expanding their presence to diversify funding sources.
The concentration of originations is also increasing, with the top 20 NBFC originators capturing 67% of the market, up from 56% a year earlier. Aparna Kirubakaran, Director at Crisil Ratings, observed that while large NBFCs continue to leverage securitisation robustly, smaller and mid-sized NBFCs—primarily focused on microfinance, unsecured personal loans, and business loans—have moderated activity amid cautious investor sentiment.
Bank Participation Remains Subdued
Conversely, banks exhibited a slowdown in securitisation originations during the quarter. This trend is attributed to improvements in banks’ credit-to-deposit ratios, reducing their immediate need to securitise assets. However, private sector banks still maintain a significant role in the investment space, actively acquiring both direct assignments (DAs) and pass-through certificates (PTCs), whereas public sector banks predominantly invest in DAs.
Asset Class Dynamics
In terms of asset classes, vehicle loans—which include commercial vehicles and two-wheelers—held a stable share of 41% of securitisation volumes. Mortgage-backed loans, however, declined to about 21% from 25% year-on-year, primarily due to decreased originations by a major private sector bank.
Noteworthy is the significant rise in gold loan securitisations, which surged to 11% from negligible levels in the previous year. This growth followed the removal of regulatory constraints on a leading originator, thereby unlocking new funding avenues in the segment.
Pass-Through Certificates Gain Prominence
Investor preferences indicate a clear tilt toward pass-through certificates, which reached a decadal high of 58% market share in securitisation structures, whereas direct assignments accounted for the remaining 42%. This shift signals a growing appetite for instruments offering better risk distribution and liquidity among investors.
Outlook: Sustaining Growth Amidst Challenges
Crisil Ratings highlights that securitisation remains a compelling tool for fund raising within the financial ecosystem, especially amid robust retail credit growth and effective monetary policy transmission. Continued engagement from private sector banks and cautious optimism from investors will be crucial to maintaining the momentum in securitisation volumes throughout FY26.
As the market adapts to regulatory changes and evolving risk perceptions, securitisation is poised to reinforce its role as a strategic lever in India’s credit market, facilitating broader financial inclusion and sectoral liquidity.
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