Securitisation volume surges to Rs 70,000 cr in Q2 FY25, vehicle financiers propel growth

New Delhi, Oct 9: Driven by vehicle financing, securitisation volume in India rose 56 per cent (year-on-year) to Rs 70,000 crore in the second quarter of this fiscal (FY25), a report showed on Wednesday.

This was propelled by large issuances by some key players, especially a large private sector bank, and a few NBFCs that are primarily into vehicle financing, according to a report by CRISIL Ratings.

The performance helped securitisation volume surpass Rs 1.15 lakh crore for the first half of the fiscal, clocking a 15 per cent on-year growth. As for the investor base, banks continued to dominate the market, accounting for over 70 per cent of the securitisation volume in the first half.

According to Aparna Kirubakaran, Director, CRISIL Ratings, strong market volume observed in the first half was fuelled by large originations by a big private sector bank and a few vehicle financiers.

“Securitisation remains an efficient alternate source of fund raising as banks continue to tackle high credit-deposit ratio,” Kirubakaran mentioned.

Strong retail credit growth of non-banks (accounting for over two-thirds of securitisation originations), particularly those in vehicle financing, also continues to support their large-scale originations in the market.

The share of vehicle loans (including commercial vehicles and two-wheelers) in securitisation volume has increased to 45 per cent in the first half and continues to be the largest asset class.

Mortgage-backed securitisation loans have also seen strong growth of 23 per cent and regained around 10 per cent share in the first half of fiscal 2025 compared with last fiscal, the report said.

There was no change in the share of other asset classes, comprising of personal (7 per cent) and business loans (9 per cent). However, the share of micro-finance loans fell to 10 per cent in the first half compared with 16 per cent last fiscal as originators exercised caution in new disbursements and overall growth due to early signs of asset quality challenges.

"Overall, we expect banks and NBFCs to continue to tap the securitisation route to meet their funding diversification needs. The securitisation market remains on course to hit all-time highs this fiscal," said the report.