Indian Securitisation Market grew 45% to around Rs 25,000 crore in FY2016

MUMBAI: Indian Securitisation market grew by 45% to around Rs 25,000 cr in FY2016, a reversal of past three years’ trend, primarily due revival in asset classes like commercial vehicle and construction equipment says Icra in a report.

In the report Indian Securistisation Market, Icra said that the jump is primarily due to the increased number and volumes of Asset-Backed Securitisation (ABS) transactions, which rose by 39% and 51% respectively in the year. The rating company said that Residential Mortgage-Backed Securitisation (RMBS) transactions declined to negligible amounts.

Going forward, ICRA expects the outlook for securitisation market activity to be positive in FY2017, given the renewed interest in securitisation transactions and widening of the investor base in the securitisation market with the exemption of income at distribution from distribution tax.

In FY2016, Commercial Vehicle (CV) and Construction Equipment (CE) loans continued to be the largest asset class accounting for close to half of the total ABS volumes (similar to FY2015). Also, in FY2016, the share of microfinance loans increased further from 31% in FY2015 to 36% (22% in FY2014), partly a reflection of greater investor confidence in the asset class. Tractor loans as well as Car and UV (Utility Vehicles) loans are the other key category that contributed to 12% of the securitisation volumes.