"Excluding HDFC Limited, originators saw a significant 69% YoY surge in securitization, reaching Rs 90,000 crore in H1FY2024, up from Rs 54,000 crore in H1FY2023."
"ICRA's report notes a drop in securitization volumes from around Rs 56,000 crore in Q1FY2024 to about Rs 47,000 crore in Q2FY2024. This decrease was largely due to HDFC Limited exiting the securitization space following its merger with HDFC Bank. Nevertheless, ICRA highlights that the estimated securitization volumes of Rs 1.03 lakh crore for H1FY2024 mark a strong 39% growth compared to the Rs 74,000 crore in H1FY2023."
"Additionally, originators, excluding HDFC Limited, experienced a substantial year-on-year increase of approximately 69%, with securitization reaching Rs 90,000 crore in H1FY2024, compared to Rs 54,000 crore in H1FY2023. ICRA attributes this ongoing growth to the consistently increasing demand for credit in the financial lending sector reported by all lenders, leading to heightened funding requirements."
Abhishek Dafria, Senior Vice President and Group Head of Structured Finance Ratings at ICRA, stated, "In the past year, lending activity has experienced a substantial upswing, supported by stable macroeconomic conditions and a robust demand for credit to fuel economic growth. Securitization has emerged as a dependable fundraising tool for lenders, offering funding diversity and enhancing lenders' asset-liability profiles. Despite the exit of HDFC Limited, which had a significant contribution to overall volumes in the beginning of Q2, we anticipate the market will remain robust. According to ICRA's assessment, annual securitization volumes for FY2024 are projected to approach the pre-COVID peak of Rs 2 lakh crore."
"ICRA's analysis for H1FY2024 reveals that vehicle loans claimed the top spot as the largest asset class, comprising around 34% of securitized volumes. This shift is mainly due to HDFC Limited's exit from mortgage-backed loan securitization, which caused mortgage-backed securitization to drop to approximately 27% in H1FY2024. Following closely are microfinance (MFI) loans, accounting for about 18% of the total volumes. Other significant asset classes include SME loans, gold loans, two-wheeler loans, and personal/consumer loans. ICRA also notes that pass-through certificates (PTCs) have increased their share in total securitized volumes, reaching 49% in H1FY2024 and 56% in Q2FY2024, with the remaining share attributed to direct assignment transactions."
"In a previous report issued in July 2023, ICRA had projected that securitization volumes, primarily initiated by non-banking financial companies (NBFCs) and housing finance companies (HFCs), would reach approximately Rs 53,000 crore in Q1FY2024, marking a robust growth of around 60% compared to the approximately Rs 33,000 crore securitized in Q1FY2023."
