India’s securitisation market rose 42% to a record ₹1.47 trillion in the first half of FY27, driven by high demand for gold and vehicle loans. NBFCs continue to rely on this route to manage cash flow. ICRA expects total volumes to reach up to ₹2.7 trillion by the end of the fiscal year.
India’s securitisation market reached an all-time high in the first half of fiscal year 2027, with total volumes climbing to ₹1.47 trillion. This represents a 42% increase compared to the same period in the previous year, highlighting how non-banking financial companies (NBFCs) are actively using this method to manage their cash flow and loan portfolios.
For investors, understanding securitisation is key to tracking how NBFCs operate. In simple terms, securitisation is a process where an NBFC bundles a group of loans—such as vehicle or personal loans—and sells them to banks or other investors. By doing this, the NBFC receives cash upfront, which it can then use to issue new loans. This strategy helps NBFCs keep their balance sheets lean and ensures they have a steady supply of funds to maintain business growth.
Key Drivers of Growth
The current surge in volume has been led by two specific segments: gold loans and vehicle loans. Gold loan securitisation saw a sharp increase, with volumes growing 1.5 times compared to the previous year. Simultaneously, the vehicle loan sector saw a meaningful recovery. In the second quarter of the fiscal year alone, vehicle loans accounted for one-third of the total securitisation volume, a significant improvement from earlier in the year. Other segments like mortgages, micro-loans, and small business financing also contributed steadily to the total.
What This Means for Investors
While this record growth signals healthy demand for credit across retail and small business segments, it also reveals a structural reliance. NBFCs account for approximately 95% of securitisation issuances in the country. This means that if liquidity conditions in the broader market tighten or interest rates remain volatile, the ability of NBFCs to continue this activity could be tested. Investors monitoring NBFC stocks should watch for how companies manage their funding costs. If the cost of raising funds through securitisation rises, it could put pressure on profit margins.
Additionally, the market activity is currently evenly split between the two primary methods: pass-through certificates and direct assignment. This balance shows that NBFCs are comfortable using different structures to move loans off their books.
Looking ahead, ICRA has maintained its positive outlook for the sector. The agency projects that total securitisation volumes for the full financial year will reach between ₹2.6 trillion and ₹2.7 trillion. The key factor for investors to monitor in the coming quarters will be whether this momentum sustains despite any potential changes in interest rates or shifts in asset quality for the underlying loan portfolios.