Securitisation volumes surged by 128 per cent year-on-year to Rs 32,300 crore during the June quarter, the highest ever recorded in the first quarter, on clarity over GST and a low base,rating agency Icra said today.
"The unprecedented increase in Q1 volumes for securitisation transactions could be attributed to clarification from the revenue department earlier this fiscal on the non-applicability of GST on the transfer of receivables in securitisation/assignment transactions,"said Vibhor Mittal, head – structured finance, Icra.
He added that some of the large originators had stayed away from market in the previous fiscal due to this concern, leading to the low base, which helped the growth number.
In the same period last year, ahead of the nationwide implementation of the goods and services tax (GST), there were investor concerns on asset quality of retail loans post demonetisation which had impacted the securitisation volumes, he said.
Securitisation, which entails bundling up of assets by originating lenders and selling them against the future receivables, helps the economy as it frees up capital for the originators which can be utilised productively, Mittal said.
Pass through certificate (PTC) transactions grew by 69 per cent to Rs 11,300 crore, while direct assignment transactions increased around 180 per cent to Rs 21,000 crore, according to Icra.
Meeting the priority sector lending requirements continued to be the dominant driver for securitisation, it said, adding that half of the PTC transactions and 70 per cent of the direct assignment transactions can be attributed to it.
The growth in securitisation volumes came even as relatively tight liquidity position in capital markets and the upward movement as well as high volatility in yields meant that the "situation was not very conducive for on-balancesheet borrowings", it said.
Also, the spurt in securitisation was despite a significant 47 per cent pick-up in trading of priority sector lending certificates (PSLCs) to around Rs 86,300 crore during the quarter, the agency said.
The PSLCs act as an alternative to securitisation for banks falling short of meeting the mandated PSL requirements.
Mortgage loans dominated the securitisation volumes with a 79 per cent share, including 66 per cent home loans and 13 per cent loans against property, it said.