Whalesbook
Securitisation volumes in India climbed approximately 5% year-on-year to ₹1.87 trillion during the first nine months of fiscal year 2026. This growth was primarily propelled by robust activity from non-banking financial companies (NBFCs), according to a Crisil Ratings report.
NBFCs Drive Securitisation Surge
NBFCs demonstrated substantial momentum, posting a 35% year-on-year growth in the third quarter. Their participation was particularly strong in gold and vehicle loan pools. This surge dramatically reshaped the originator mix.
NBFCs now account for about 97% of overall retail volumes in the quarter, a significant leap from roughly 71% in the prior year's comparable period. Banks, conversely, showed muted involvement, with their share in Q3 volumes becoming negligible compared to their meaningful contribution last year.
Shifting Securitisation Landscape
Pass-through certificate (PTC) transactions continued to dominate the market, holding a 62% share of total volumes over the nine-month period. This segment included substantial deals from entities outside the traditional financial sector. Direct assignment (DA) transactions saw an uptick in the third quarter, driven by sell-downs in gold and microfinance loan portfolios.
The increasing operational complexity stemming from new co-lending guidelines is prompting some originators to shift away from co-lending structures. This trend is anticipated to foster sustained growth in DA volumes in the near to medium term.
Asset Class Performance
Gold loan securitisation experienced a remarkable expansion, capturing 12% of market volumes in the nine-month period, up from a mere 1% a year prior. This expansion was largely concentrated with a single leading originator. Vehicle loans, encompassing commercial vehicles and two-wheelers, saw a slight dip to 43% from 48% year-on-year. Nevertheless, NBFC-originated vehicle loan pools expanded by approximately 14% over the nine months.
Mortgage-backed securitisation volumes contracted to around 17% from 23% a year earlier. This decline reflects subdued activity from a major private sector bank that was previously a key originator. The microfinance sector maintained a stable 12% share, marginally up from 11% last year, despite sector-wide stresses impacting disbursements. Foreign banks have also begun exploring investments in microfinance pools via the PTC route to satisfy priority sector lending mandates. Personal and business loan securitisation share decreased slightly to approximately 15% from 16%.
Investor Confidence and Outlook
Investors displayed continued caution towards unsecured asset classes and loans against property, citing asset quality concerns. Banks remained the primary investor base. However, the consistent healthy performance of securitised pools has encouraged increased participation from mutual funds in PTC investments.
Looking ahead, securitisation volumes are projected to remain steady in the upcoming fiscal year. NBFCs are expected to persist in leveraging the market for funding needs. A gradual improvement in banks' credit-deposit ratios could also spur a slow increase in bank-led originations.