India’s securitisation market rose 22% to a record ₹60,000 crore in Q1 FY27, led by NBFCs. Gold loans emerged as the top asset class, overtaking vehicle loans for the first time. This reflects strong demand for funding as banks and NBFCs look for ways to manage credit growth.
India’s securitisation market saw its most active first quarter on record for fiscal year 2027, with total issuances touching ₹60,000 crore. This 22% growth compared to the same quarter last year was driven almost entirely by non-banking financial companies (NBFCs), which were responsible for over 98% of the volume. Securitisation is a process where financial companies pool together loans they have given out and sell them to investors, allowing them to raise fresh cash to lend again.
Gold Loans Overtake Vehicle Assets
A major change in the market is the rise of gold-backed loans, which became the largest asset class in the securitisation pool this quarter, accounting for 31% of the total. Previously, vehicle loans held the top spot, but their share dropped to 26% this quarter. This shift happened because vehicle loan originators were less active in the market, while gold loan financiers aggressively used the direct assignment route to secure funding. Public sector banks have been major buyers of these gold loan pools, largely because they are considered lower-risk assets with a history of very small losses.
Investor Preferences and Funding Routes
The way these transactions are structured also changed. The direct assignment route, where a loan portfolio is transferred directly to an investor, grew to represent 54% of all deals. This was preferred particularly for gold loans and secured business loans. Meanwhile, pass-through certificates, which are a more traditional way of bundling loans into tradable securities, saw their share fall to 46% from 58% in the same period last year. Banks continue to be the biggest investors in these pools, buying about 90% of the total issuances, though participation from mutual funds, insurance companies, and family offices remains steady.
Looking Ahead
The rise in business loan securitisation, which grew by 300 basis points to reach a 10% share, shows that investors are increasingly favoring loans that have some form of collateral attached. Similarly, microfinance loans also saw their share of the market increase to 14%. The market is benefiting from a trend where credit demand in the country is growing faster than the deposits that banks are able to collect. As a result, banks are turning to securitisation as a strategic way to support their lending targets. With the number of unique companies issuing these securities growing to 115, up from 90 last year, market activity is expected to stay strong in the coming quarters. Investors may track the sustainability of this credit growth and whether the trend of prioritizing collateral-backed assets like gold and business loans continues in future quarterly reports.