India’s securitisation market saw a 20% year-on-year volume jump in the first quarter of FY2027, reaching ₹61,000 crore. Driven by non-banking financial companies (NBFCs), this activity highlights a shift as lenders use securitisation for essential funding and liquidity. Gold and vehicle loans remain the most popular assets for these transactions.
The Indian securitisation market, a process where lenders bundle loans to sell them as securities to investors, has started the 2026-27 fiscal year with strong momentum. Total volumes for the April-June quarter reached an estimated ₹61,000 crore, reflecting a 20% increase compared to the same period in the previous year. Industry projections now suggest the market could reach between ₹2.6 lakh crore and ₹2.7 lakh crore by the end of FY2027.
NBFCs Drive Market Activity
Non-banking financial companies (NBFCs) continue to be the primary force behind this market growth. While some larger entities have reduced their sell-down volumes, increased participation from smaller and mid-sized lenders has kept the market active. For these companies, securitisation is a critical mechanism for raising funds and managing cash flow. Conversely, traditional banks have shown a reduced appetite for securitisation over the past year, leaving the market to be dominated by non-bank originators.
Leading Asset Classes
Gold loans and vehicle loans remain the backbone of the securitisation market. During the first quarter, gold loans accounted for approximately 28% of total volumes, while vehicle loans followed closely at 25%. Mortgage loans and microfinance portfolios each held a 13% share. Notably, the microfinance sector has shown improved collection efficiency, which has helped regain investor confidence in these assets. However, the market has seen a slowdown in the securitisation of MSME and business loans, as investors remain cautious regarding potential stress in these specific segments due to broader economic pressures.
Transaction Structures and Investor Focus
Market participants largely utilized direct assignments (DA), which accounted for 53% of the total volume in the first quarter, while pass-through certificates (PTCs) made up the remaining 47%. The preference for structure often depends on the asset class; for instance, gold and mortgage portfolios are typically transacted through the DA route, whereas vehicle and microfinance loans often use the PTC structure.
For investors, the key monitorable remains the stability of the underlying loan pools. While gold-backed assets are generally considered to have lower credit risk due to the collateral, other asset classes like MSME or microfinance loans carry higher sensitivity to interest rate fluctuations and economic cycles. Future market growth will likely depend on the ability of these originators to maintain strong asset quality and the willingness of banks and other institutional investors to continue purchasing these loan bundles. Investors may watch for upcoming data on collection trends and any regulatory updates from the Reserve Bank of India that could impact how these assets are bundled and sold.